Schools: Curriculum Update
 - Question

Lord Holmes of Richmond: To ask His Majesty’s Government whether they plan to launch a commission to consider how the school curriculum may be updated to include (1) data literacy, (2) digital literacy, (3) financial literacy, and (4) character and resilience education.

Lord Holmes of Richmond: My Lords, I beg leave to ask the Question standing in my name on the Order Paper and declare my technology interests as set out in the register.

Baroness Barran: My Lords, the Government have no plans to launch a commission to review the curriculum. Data literacy is covered within mathematics, science, computing and geography; digital literacy within computing, and relationships, sex and health education; and financial literacy within citizenship and mathematics. Relationships, sex and health education, and citizenship, directly support the development of character and resilience, and schools can reinforce personal development in other curriculum subjects and through their extracurricular enrichment offer.

Lord Holmes of Richmond: My Lords, if AI is to human intellect what steam was to human strength, your Lordships will see the extent of the issue. Steam literally changed time. This is just AI; when it is considered alongside the other emerging technologies, issues around data and privacy, the platforms and the approaching metaverse, is it not clear that it is high time to launch a commission to consider a complete overhaul of the curriculum? It should enable young people—ultimately, all people—to be safe, secure and successful, optimising the opportunity for human talent to lead technology.

Baroness Barran: I agree with my noble friend’s point about the importance of data and AI and how they may transform many aspects of our lives. The Prime Minister has been absolutely clear about our national commitment to be a leader in this space. There is a great deal of work going on across government but, in the interim, we are absolutely committed to elements within the curriculum that deliver on all the issues my noble friend raises.

Baroness Thornton: My Lords, everyone would agree on the need for a relevant curriculum, so the noble Lord, Lord Holmes, makes a very good point, particularly on building character and resilience. Can the Minister explain to the House how children’s resilience can be built when the Public Accounts Committee report published yesterday found that the attainment gap in respect of the most disadvantaged children has continued to grow? The Government appear to have no specified measurement for the success of the additional investment in the National Tutoring Programme.

Baroness Barran: This country is not unique in its disadvantaged children having suffered particularly during the pandemic. We have been very clear about our vision for the National Tutoring Programme, which is particularly relevant in giving disadvantaged children access to some of the privileges enjoyed by children from more socially advantaged homes. Tutoring on its own is not enough, which is why we have made a number of commitments including, at one end of the spectrum, putting senior mental health leads in our schools and, at the other, reinforcing our commitment to sport, music and other resilience-building activities in our schools.

Lord Singh of Wimbledon: My Lords, does the Minister agree that the building of character and resilience does not require the appointment of a commission? Teachings of right and wrong, and of responsibility and resilience, are common in our different religions and other world views, but are, sadly, badly obscured in formal RE, with its overfocus on rituals, artefacts and the shape and size of religious buildings. Does the Minister further agree that much greater emphasis should be put on the important ethical commonalities between religions?

Baroness Barran: I am not sure that I agree with the noble Lord’s description of the RE curriculum, but he makes the broader point that schools play a part—along with, obviously and incredibly importantly, families—in setting the moral compass of our children and our nation’s future.

Lord Cormack: My Lords, when my noble friend Lord Holmes asked a similarly important Question a little while ago and I raised the importance of our schoolchildren having a real foundation in the history of their country, my noble friend replied very positively and was encouraging. Has she any further progress to report?

Baroness Barran: We are not changing the national curriculum, but we did a major review of it in 2014. A knowledge-rich curriculum, which evidence suggests is particularly important for children from disadvantaged communities, continues to be our focus.

Lord Blunkett: My Lords, I think we all agree that there will be a point when the improvement and radical updating of the curriculum are needed. If that is to happen, putting in place the required backing for teachers to get support will be necessary. The Minister gave a very helpful answer when she talked about  citizenship. Will she reflect that some of the people who have the greatest character and resilience in reality are those living in the most desperate circumstances—often a single parent abandoned by their partner with three or four children in a high-rise block? Preaching to them is not what they need.

Baroness Barran: I really hope that I did not give the impression that any element of preaching was going on. I absolutely recognise the description that the noble Lord gave. I just ask the House to reflect on this idea of radical improvement being needed in the curriculum. England just came fourth in the PIRLS global reading survey; we are, as we like to say in the DfE, the best in the West. That does not sound to me like a curriculum that needs radical overhaul.

Bishop of Leeds: My Lords, does the Minister agree that resilience is not something primarily that is taught? It is something that develops as you take what is thrown at you in the experiences of life. To that end, is any thinking going on in government about future curricula which allow for children in our schools, particularly secondary schools, to be exposed to opinions and things with which they do not agree in order that they are able to live in a world of conflicting dogmas and opinions, and do not have to run away from them?

Baroness Barran: The right reverend Prelate makes a very important point. The House is obviously familiar with the emphasis we have put on freedom of speech, particularly in our higher education institutions, but the skills of critical thinking, analysis and debate—which data will feed into in coming to objective and balanced views and an ability to listen to others—obviously need to start in our schools and homes.

Lord McNally: My Lords, these exchanges have already pinpointed the problem that the noble Lord, Lord Holmes, is trying to highlight. The skills required by the next generation to understand and deal with new technologies are real and present now. Quite frankly, the list he put forward of skills to be acquired are beyond the reach of a single department, including the Department for Education. His idea of a commission, possibly sponsored by the Prime Minister, who has skills in this area, is now needed to avoid moving into another era when most of our population are ill-equipped to deal with the technologies serving them.

Baroness Barran: It would help to understand some of the specific areas of concern. Data and its use are firmly embedded in the mathematics, science, geography and computing curriculums. Computing is a statutory national curriculum subject from key stage 1 to key stage 4. We have introduced, and are introducing, a number of digital-focused T-levels. The fundamental point is that, as shown in the OECD PISA surveys, without strong mathematics and reading, you cannot achieve literacy in any of these things. That is why our focus on those building blocks is so crucial.

Baroness Sater: My Lords, numerous reports, including the publication in February from the APPG on Financial Education for Young People, of which I am vice-chair, have consistently highlighted that the provision of financial education is severely lacking in our schools. Can the Minister tell me why the Government do not prioritise this issue, given that doing so would result in more of our children leaving school with a crucial life skill?

Baroness Barran: I cannot accept my noble friend’s assertion that we are not providing this effectively. We appreciate that there are some issues in the delivery of financial education—for example, we know that only 69% of secondary schools say that they teach money management. I know that reviews have shown a lack of confidence among some teachers in delivering financial education, which is why the Oak National Academy is producing more dedicated materials to support teachers. The Money and Pensions Service produced financial education guidance for schools in 2021. We are working on this across every aspect, but I reiterate that without mathematics and reading, we will not achieve financial literacy.

Housing: Modular Construction
 - Question

Lord Rooker: To ask His Majesty’s Government whether they plan to improve the rates of home ownership by the use of modular construction techniques.

Baroness Scott of Bybrook: My Lords, the Government are committed to increasing the number of homes built using modern methods of construction—MMC—across all housing tenures. MMC offers a range of benefits, such as delivering high-quality energy-efficient homes more quickly, and the Government are supporting the sector with our £1.5 billion levelling up home building fund and providing funding for up to 40,000 MMC homes through the affordable homes programme to help deliver these benefits at scale.

Lord Rooker: I thank the Minister for her Answer. Does she agree that modern methods of construction are safer for employees, create less waste and avoid the corner-cutting of Friday afternoons on wet building sites? However, the technology requires a systematic pipeline: you cannot switch factories on and off. Are the Government taking action to ensure that mortgage providers are confident in modern technology and, above all, that planning departments, which have a prejudice that remains today, accept modern technology?

Baroness Scott of Bybrook: I know that the noble Lord has been interested in this sector for many years. I assure him that the Government are taking this very seriously. We are focusing on removing all the barriers to growth. These are about insurance, finance, warranties and, as he mentioned, mortgages. It is all  about stimulating that pipeline so that these companies can invest and keep those factories going until this becomes a normality in our housing system.

Lord Young of Cookham: My Lords, has my noble friend read the government publication Modern Methods of Construction, published in September last year? It says:
“The government is committed to using its position as the single largest construction client to support the adoption of a more productive and sustainable business model”,
and goes on to say that there is
“a presumption in favour of off-site construction for relevant departments”.
What progress have the Government been able to make in using MMC for the prison and hospital building programme? If there is success there, might it not encourage the housebuilding industry to take renewed interest in MMC for homes?

Baroness Scott of Bybrook: On my noble friend’s last point, that is exactly what we are doing: we are encouraging all the time through investment and support to help housebuilding. On other issues of building public buildings in particular, we want to encourage the take-up of MMC across the whole range of traditional building sites. We can do that by sharing across government. We have introduced a presumption in favour of MMC in our capital programmes, such as within the Department for Education’s school rebuilding programme and the Ministry of Defence accommodation programme. Significant progress has been made on schools and prisons programmes, and we are using those examples of best practice to help shape future policy for MMC.

Lord Beith: My Lords, in the social housing sector, Legal & General stopped production on the basis that there was an insufficient pipeline of orders and it had had six years of losses. What discussions are the Government having with the social housing sector to see whether modular construction can contribute not just to owner occupation but to dealing with a very serious shortage of social housing?

Baroness Scott of Bybrook: As I have said, it is across all sectors. We need to support the MMC sector to increase the amount of housing across the board, whether that be private, affordable or social rented.

Baroness Taylor of Stevenage: My Lords, in recent discussions in your Lordships’ House and in Grand Committee, noble Lords have expressed huge concern about the Government’s plans to lower the standards of licensing for houses in multiple occupation, specifically those to be used for asylum seekers. Local councils are now using modular construction to provide high-quality, low-cost, self-contained accommodation for the homeless. Has the Minister considered this method of housing asylum seekers?

Baroness Scott of Bybrook: I am not aware that we have looked at this for asylum seekers particularly, but if there is a requirement for high-quality housing to be delivered quickly then we will of course work  across government, as I said we are doing, to ensure that all departments look at MMC as a method of delivering quickly and safely.

Lord Kamall: What conversations have there been across government departments on the environmental impact of introducing modular housing, particularly the use of shipping containers for modular homes, which are seen to be a more environmentally friendly way of avoiding waste and providing homes for the future?

Baroness Scott of Bybrook: One of the main things with modular homes is that they are more environmentally friendly: they are energy efficient and use more environmentally friendly products. We need to keep pushing this to get this sector to be a far more major part of our whole building industry.

Lord Patel: My Lords, in 2019, the Science and Technology Select Committee produced a report on off-site construction. I am pleased to hear that the Government accepted the recommendation for procurement for government buildings to be on that basis. One of the other recommendations was on the skills gap that needs to be filled, particularly for the Government to work with the construction industry and the Construction Leadership Council to develop the skills that we require for off-site construction.

Baroness Scott of Bybrook: Skilling up in modern methods is extremely important for the whole construction industry. There are two ways that we are doing this. First, the Construction Industry Training Board levy applies to all employers engaged wholly or mainly in construction industry activities. Secondly, the Government’s apprenticeship levy funds slightly different activities, but these funds are ring-fenced to support apprenticeships across the whole construction industry, which is what we require to skill up the workforce to deliver what we want, particularly in MMC.

Lord Sikka: My Lords, today, 62% of the population owns a home of any kind in the UK, compared with 71% in 2003. The main reason for that is the government-backed wage freezes. The real average wage today is lower than in 2007 and workers’ share of GDP is at a 50-year low. People simply cannot afford to buy a home. Can the Minister explain what steps the Government will take to increase workers’ share of GDP, which necessarily requires a reduction in capital’s share of GDP as well?

Baroness Scott of Bybrook: The question is slightly off-piste and I could be standing here for quite a long time answering it, but I will certainly ask the Treasury. The noble Lord mentions home ownership, which is really important. Since spring 2010, as I think I said yesterday, 837,000 households have been helped to purchase a home through government-backed schemes. That is the important bit. Continually putting up the living wage for people and encouraging them to be homeowners is something that this Government have done, and done well.

Lord Sterling of Plaistow: My Lords, I totally support the view of the noble Lord, Lord Rooker. One of my previous companies, Bovis, can erect a modular home in six weeks flat. They are wonderful places to live and hugely energy efficient; planning is the major problem.

Baroness Scott of Bybrook: My noble friend is absolutely right. These homes can go up quickly but the long period of time is often in the planning system. That is why the levelling-up Bill is going through, through which we hope to make the planning system simpler and quicker for developers.

Lord Porter of Spalding: My Lords, I declare my interests as on the register. Is there any evidence to show that planning is actually a barrier to modern methods of construction?

Baroness Scott of Bybrook: My noble friend would ask that question. I suggest that it is a barrier not just to this method of construction, although the sector needs to consider how it sells itself to the public. There is all this talk about MMC not being proper housing, whereas if anybody goes to see it they can see that it is beautiful housing. It is not ugly and can look like any other traditionally built house. However, the planning system needs to be faster for all types of construction, including MMC.

RAF: C-130J Hercules
 - Question

Lord Coaker: To ask His Majesty’s Government what assessment they have made of the impact of withdrawing the C-130J Hercules aircraft on the capacity of the RAF transport fleet.

Baroness Goldie: My Lords, the Atlas A400M is the next generation of air mobility aircraft. It is a more modern and capable aircraft than the Hercules C-130J, offering the opportunity to approach those tasks carried out by the Hercules in a different manner. Compared with Hercules, Atlas has an improved lift capacity and range. It is increasingly capable in the tactical role and has proven operational credibility in the airlift role.

Lord Coaker: A month ago, two-thirds of the incoming Atlas A400 fleet, which will at the end of this month replace the Hercules craft that were, for example, so important in Sudan, were still listed as unavailable for flying missions as they cannot carry out all the niche functions of the C-130s, such as in Special Forces missions. The response from the defence sector has been scathing; some I cannot quote but others have said that the UK will be “dangerously exposed”. Does the Minister accept that criticism? From 1 July, how many transport aircraft will be in operation until the remaining planes are fit for purpose, whenever that will be?

Baroness Goldie: As the noble Lord will be aware, we have taken delivery of the full cohort of flight, that being 22 of these aircraft. It is the case that there were some niche challenges and some availability issues to do with global supply, but I reassure your Lordships about two things: all critical operational commitments are met and all critical operational commitments continue to be met. The issues around niche capabilities boiled down to two things: a small range of niche airdrop capabilities and a small range of air dispatch capabilities. I cannot give further detail on those but they are now being accelerated in terms of being addressed. On availability, I am pleased to confirm that the improvement there has been manifest. We have seen a 25% to 30% improvement in availability compared with 18 months ago.

Lord Stirrup: My Lords, the reference to niche capabilities makes this sound like something minor but we are talking about Special Forces operations here. Can the Minister tell the House by what date the Atlas fleet will be capable of the full range of Special Forces missions? Can she also say, given the difficulties with the serviceability of the Atlas, what the target rate of availability is for that aircraft fleet and how it compares with its current availability?

Baroness Goldie: As the noble and gallant Lord will be aware, on availability, if we factor in planned maintenance for the whole fleet and retrofitting for some of the older A400Ms to bring them up to modern standards, there will always be an element of unavailability. On the matter of the Special Forces, the noble and gallant Lord will understand that I cannot comment specifically on their activities, but I refer him to the meeting on 17 May of the Defence Select Committee in the other place, when Air Chief Marshal Sir Richard Knighton—now Chief of the Air Staff—reassured the committee that he had spoken to Director Special Forces. He was clear that he was very impressed with the A400M and that it could achieve all potential courses of action.

Lord Lancaster of Kimbolton: My Lords, I declare my interest as the Government’s defence export advocate. The Hercules has given loyal service for more than 60 years but its successor, the A400M, has been planned for some 20 years. It has double the range and double the payload, and it flies faster. It does all the things that the Hercules can do, or it will do in time, but there have been some niche problems, as has been explained. However, my understanding is that some of our European allies will now not seek to buy their initial order of A400Ms, meaning that there will be some spare capacity in the production line. If the price is right, will the Government consider buying some more?

Baroness Goldie: My noble friend never hesitates to tempt me to give the Chamber interesting titbits from the Dispatch Box. The current fleet of 22 aircraft is the basis on which we are currently working. As my noble friend will be aware, the Atlas will not completely replicate what the Hercules did; it is a more versatile plane and there are other activities that other aircraft can carry out.

Baroness Smith of Newnham: My Lords, the Hercules has been taken out of service. Fourteen of them were due to continue until the 2030s but are being withdrawn this year. In December last year, the National Audit Office indicated that, instead of there being more Atlases, 22 was going to be the total number. Is the Minister reassured that we have sufficient capabilities, niche or otherwise? If not, could she go back to the department and suggest that the noble Lord, Lord Lancaster, is right that we should be seeking to increase the number of A400Ms?

Baroness Goldie: I will take the last bit of the noble Baroness’s question first. There is no evidence to suggest that the size of that capability is inadequate. I have been frank about the acceleration of the capabilities where improvement had to be effected; that is happening. In fact, what was evident from Operation Polar Bear, the evacuation from Sudan, was that the Atlas acquitted itself with distinction. It got a lot of people out—more than a Hercules could ever have done—so, as I say, it is fit for purpose. I repeat: all critical operational commitments are being met.

Lord Trefgarne: My Lords, I refer to the two special occasions when I was exposed to the capabilities of the C-130. The first was a no less than 12-hour flight from Ascension Island to the Falklands; we refuelled at least twice in the air on the way. That flight was commanded by Wing Commander Carrington, whose younger brother is, I believe, now the noble Lord, Lord Carrington of Fulham. The second occasion was when I did a parachute jump into Poole Harbour from the back of a C-130. Happily, I was rescued very quickly by the Royal Marines.

Baroness Goldie: I must observe that my noble friend is much more intrepid than I am.

Lord Bellingham: My Lords, the Minister will probably be aware that A400Ms from the UK, France and Germany performed quite superbly during the Caribbean disaster relief operations after Hurricane Irma in 2017, landing on rougher strips and carrying heavier loads, including Puma helicopters. Further to my noble friend Lord Lancaster’s question, exports are going to be crucial—not just to the UK economy but to BAE in particular. How is the export programme going?

Baroness Goldie: I have no specific information on that. I shall undertake to write to my noble friend with whatever information I can procure.

Lord Kamall: Could my noble friend the Minister give us some more information about the reports there have been that 15 nations, 11 of which are NATO members, are interested in buying RAF Hercules C-130s? Is the intention to sell them before we get the required number of A400Ms? Can she give us any more information about those proposed sales?

Baroness Goldie: I can confirm that the Hercules will be withdrawn from service at the end of this month, and that sales activity is already being managed through the Defence Equipment Sales Authority. Disposal  is at a very early stage, but we are already looking at activities to support the potential sale of the aircraft, support equipment, specialised C-130J spares and flight simulators. We are exploring potential sales on a Government-to-Government basis.

Covid-19 Inquiry
 - Question

Lord Foulkes of Cumnock: To ask His Majesty’s Government what range of information they have now agreed to provide to the COVID-19 inquiry.

Baroness Neville-Rolfe: My Lords, we have provided, and will continue to provide, the inquiry with all relevant material as requested. Following the request of the chair, the Cabinet Office will share a schedule of WhatsApp messages by the end of this week, and additional witness statements will follow. We have provided enormous quantities of material to the inquiry so far and will continue to do so. We remain determined to provide any potentially relevant material that the chair requests so that we can learn the lessons from this dreadful pandemic.

Lord Foulkes of Cumnock: My Lords, this is a total shambles—and there is more to come. As well as this totally futile dispute, I understand that the noble and learned Baroness, Lady Hallett, has met with Lord Brailsford, who is chairing the separate Scottish report. Members will recall that the separate guidance and response in the different countries of the United Kingdom caused confusion and distress. Two separate reports could cause additional confusion and distress. Will the Minister give a clear indication as to when the reports will be published so that those whose relatives died needlessly will know who was responsible?

Baroness Neville-Rolfe: It is indeed the case that the Scottish Government are doing their own separate inquiry, and they organised separate arrangements during the pandemic. The inquiry is in the hands of the noble and learned Baroness, Lady Hallett. She is doing a very wide-ranging inquiry, and the timing of its results depends on her work, which, as I have explained, we are trying our very best to progress. We are providing a huge amount of support from right across government.

Lord Robathan: My noble friend will recall that, back in 2020 and 2021, the opposition parties were very keen to lock down for longer and harder than we actually did. Could my noble friend tell us what assessment the Government have made of the efficacy of lockdowns and the costs to the country in social, economic, health and educational terms, and whether anybody now believes that the lockdowns were a good idea?

Baroness Neville-Rolfe: My noble friend speaks powerfully, as always. However, this is a matter for the inquiry. We have set up this wide-ranging inquiry so that these points can be looked at. It is right that different witnesses are recounting their experiences and that the inquiry is able to call upon the sorts of findings that my noble friend has mentioned.

Lord Wallace of Saltaire: My Lords, does the Minister recall an earlier government-appointed judicial inquiry in which the Government chose what material to release to the judge rather than allowing the judge, under the rule of law, to choose for himself or herself? Also, does the Government’s recourse to judicial review mean that they have now reversed their previous attitude to limiting the judicial review and that therefore we can expect not to see ouster clauses in any future Bills under this Government?

Baroness Neville-Rolfe: Although this is a much wider inquiry even than other previous important inquiries, the process that has been followed by the Cabinet Office and across Whitehall is very similar in terms of providing information to the chair. There is a judicial review because of a specific technical point raised by the Section 21 notice that has been issued. In terms of judicial review, the noble Lord is right that judicial review must be used with circumspection. However, there is an important technical point here about whether it is right to provide unambiguously irrelevant material to the inquiry which is the subject of the review.

Lord Butler of Brockwell: My Lords, there is a strong public interest in this inquiry being carried out constructively and expeditiously, and that should also be a public interest between the Government and the investigation. Does the Minister agree that it would be helpful if judicial review proceedings were stayed so that the Government and the inquiry could reach a reasonable accommodation on this issue?

Baroness Neville-Rolfe: I agree with the noble Lord about the possibility of an accommodation being reached. We have had discussions with the inquiry to bridge the gap between sincerely held views. However, we have also requested that any judicial review is held expeditiously, and we are very glad that the court has agreed to deal with this before the end of June. In the meantime—and I cannot emphasise this more strongly—every day more material is being sent into the inquiry and the large teams working on this important matter are co-operating.

Lord Clark of Windermere: My Lords, does the Minister guarantee that the inquiry will be provided with the figures outlining the serious loss of personnel in the NHS, which is causing serious problems in the cancer field, as we have heard about today, and which have occurred over the period that it is investigating?

Baroness Neville-Rolfe: I assure the noble Lord that anything that is Covid related is being made available to the inquiry, subject to some security points.  The impact of the Covid measures on the wider NHS and health is a matter for the chair but is inherently relevant.

Lord Forsyth of Drumlean: My Lords, does my noble friend not think that the noble and learned Baroness, Lady Hallett, might draw some lessons from the experience of France and Sweden? They have completed their inquiries and been able to give guidance on where mistakes were made and what should happen in the future. Why on earth has this inquiry been extended in scope such that we cannot get the answers which the entire country is waiting for?

Baroness Neville-Rolfe: This is an independent inquiry, and its conduct is for the chair. However, clearly the experience of other countries is also important, and I am sure that material in respect of those will be submitted to the inquiry and taken into account.

Baroness Smith of Basildon: My Lords, I raised this issue of the timing during the Minister’s Statement earlier this week. The amount of information that the Government say is relevant is enormous. They have said that 20 million documents may be relevant to the inquiry and, so far, something like 55,000 have been submitted. Why were the terms of reference of exactly what was required, and a timescale, not agreed between the Government and the inquiry prior to it starting? What is the Government’s assessment of the time that it will take them to go through these 20 million documents?

Baroness Neville-Rolfe: As I explained, ever since the inquiry was agreed, the Government have been helping it to ensure that, as is the precedent of other inquiries, the key documents are made available and appropriate witness statements are prepared. We have extended that process to wider material at its request, to reflect modern communications. The terms of reference were wide and a lot of discretion was left to the chair. The Government are keen to see the inquiry’s conclusions and findings as soon as possible. It is being phased by modules, and we look forward to hearing the chair’s conclusions.

Lord Alton of Liverpool: My Lords, will the Minister assure the House that key documents will include information to the inquiry on the role of procurement, including concerns raised about transparency by the National Audit Office? It does not take an inquiry for the Minister to establish from her noble friends when the issue of the 118 million items still stored in the People’s Republic of China, costing this country £250,000 every day, will be resolved. If she cannot answer that now, will she agree to write?

Baroness Neville-Rolfe: Arrangements for procurement are very much at the heart of some of the issues in the inquiry, as I remember we discussed here on many occasions with the noble Lord. Of course, this was covered by the terms of reference; I look forward to hearing the conclusions just as much as he does.

Baroness Chakrabarti: My Lords, I wonder what kind of example the Government think they are setting for other parties to litigation or, indeed, to judicial inquiries. The noble Lord, Lord Wallace, deserved a better answer; who is the ultimate arbiter of what is relevant when that is in dispute? Is it the Government or the trusted senior judge?

Baroness Neville-Rolfe: Of course we trust the senior judge. She has control over what she decides within the framework of the inquiry, as we have been discussing, which has advantages and disadvantages. In the judicial review, we are addressing the narrow point of whether it is right to provide unambiguously irrelevant material. This could cover anything from civil servants’ or families’ medical conditions to matters totally unconnected with the Government’s handling of Covid. It seems right to have a ruling on how that should be handled, not least given the implications for future inquiries and future Governments.

Business of the House

Lord Newby: My Lords, before we move on to further business, I will refer to events yesterday. As noble Lords will be aware, the House sat until 4.20 am this morning. In my 26 years in your Lordships’ House, I cannot remember a Committee stage going so late. When the House has sat very late in recent times, it has been because of extreme and legitimate time pressures to get legislation on to the statute book.
I do not think that debating extremely important legislation in the middle of the night is sensible or acceptable in the absence of unavoidable time pressures. It is even less acceptable given that there was no agreement in advance, at least from these Benches and, I believe, the Cross Benches, on what sitting “late” meant. There was also clearly inadequate communication with the Lord Speaker’s office, as I believe the noble Lord, Lord Lexden, the last Deputy Speaker to be rostered, found himself having to sit on the Woolsack for a continuous six hours.
I therefore have several questions for the Leader. Will he explain what urgency impelled him to believe it necessary for the House to sit so late? Does he believe that it is acceptable for staff to have to work until 4.20 am and then to expect the House to be fully operational by 11 am this morning? Does he accept that, as a self-regulating House, all groups in the House need to be informed in good time of the Government’s proposals for sitting and rising times? Can he give an assurance that the House will not sit into the early hours again except in cases of extreme urgency? Finally, will he agree to an early meeting with group leaders, the Convenor and Whips to discuss how we can avoid such circumstances as occurred last night being repeated during the lifetime of this Parliament?

Baroness Smith of Basildon: My Lords, it is quite clear that, while some Members may be looking fresh-faced, bright and breezy this morning, others are looking a bit bleary-eyed. The difficulty with very  late—or, I should say, early morning—sittings is that they exclude Members who have contributions to make who cannot remain as late.
This is a complex and controversial Bill that we are discussing, which needs examination and scrutiny. May I put forward three suggestions? First, we still have no impact assessment for the Bill. It has been through the Commons; it is now in Committee here and we have Report to come. It would be very helpful if the noble Baroness could commit that, before we get to Report, the impact assessment will be ready. The guidance on legislation says that it should be ready at the start of a Bill’s consideration; I do not think it unreasonable to ask to have the impact assessment before Report.
Secondly, I appreciate that the Minister is relatively new to his job, but I hope he will come to recognise that the House appreciates full answers, co-operation and collaboration. It is possible to disagree agreeably. That kind of co-operation across the House would help the passage of a Bill that is contentious.
Thirdly, it would be helpful to the entire House if all of us, when speaking—and to coin a phrase from the radio—avoided hesitation, repetition and deviation. My noble friend Lord Kennedy has been giving this a great deal of thought—he had until 4.30 am to do so. It would be helpful to have an early meeting of the usual channels to look for a way forward. We recognise that the Government want to get their legislation through and to proceed in a timely manner, but we also want to have the proper debate and discussion that we need.
I agree that, if we are sitting late, it is a courtesy to Parliament as a whole that the caterers, doorkeepers, Lord Speaker’s office and others involved be made aware of that—if there is any possibility of it happening again.

Earl of Kinnoull: My Lords, it is slightly “three in the hoose” to say the same thing, but I think it is worth underlining these points. Yesterday’s events were, by any measure, extreme. They underline the absolute importance of communication, which came up short yesterday.
Our community is quite a big one. The community of Members is part of that, and we were under the impression that things would be wrapped up shortly after midnight. The deputies community—I am of course a deputy as well—had rostered for the hour after midnight, so it was caught short. I note that the noble Lord, Lord Lexden, is not in his place; I hope he is sleeping the sleep of heroes.
There are other members of the community as well; I have written down a few: our doorkeepers, our clerks, Hansard, the catering staff, the broadcast staff, and even a gentleman in the facilities department who is always here when we are sitting. Communication with these people is essential, and I think we can do better. I therefore ask the noble Baroness the Chief Whip—I suppose it is she who is going to respond—to confirm that she is committed to the principle of even-handed treatment of and strong communication with our community on these things, because then we can manage much better.

Baroness Williams of Trafford: Good morning, my Lords. The last point made by the noble Earl, Lord Kinnoull, is absolutely right. The points that I make this morning will underline that consistency in those principles is very important.
One of the first things to say is that Governments should get their business through. I stand here as Chief Whip to say that what the Opposition commit to doing, I will also commit to doing if I am ever the Opposition Chief Whip. That is a really important principle. Regarding that principle, the Liberal Democrats, when they were a partner in government, spent from 2.15 pm one day until 12.51 pm the following day on getting the AV vote through. Whether the House feels that that was an important, urgent thing to have got through, they did get it through. The House sat until they did, and that was the Committee stage of a Bill.
I endorse the point from the noble Baroness, Lady Smith, about the repetition of arguments. At 3.15 am, I thought that I had fallen asleep, because the noble Lord, Lord Scriven, was repeating arguments from earlier in the day—important though they were. The Companion includes an important principle on the repetition of argument.

Baroness Bennett of Manor Castle: Oh!

Baroness Williams of Trafford: The noble Baroness, Lady Bennett, shakes her head at literally everything, but this is in the Companion. Unless noble Lords want to change the Companion, it remains there.
I was also accused of detaining the House. The House detained the House, because, on the point of the repetition of argument, it was the Committee’s decision to keep making the same arguments again and again.
On the point about the usual channels, I was planning to speak to the usual channels 23 minutes ago, but I accommodated the Liberal Democrat Chief Whip, and we will speak later.
My noble friend Lord Lexden is a national treasure. He sat here for hours, without complaint, because that is the sort of professional that he is.
On the point raised by the noble Baroness, Lady Smith, about the impact assessment, I will certainly take that back. I will speak to the Minister and we will do what we can.
The most important thing I will take away is about communication with the people who support the running of this House.

Baroness McIntosh of Hudnall: Although I am sure that the noble Baroness has made some extremely valuable points, could she respond to the question that was put to her by several noble Lords on the subject of what the plans are for similarly late sittings in the future?

Baroness Williams of Trafford: I think that my first point answered that: the Government will get their priority business through.

Baroness Jones of Moulsecoomb: My Lords, does the noble Baroness understand that, if the Bills were better when they came to the House, there would be fewer amendments and it would take less time to get them through?

Baroness Williams of Trafford: That is a judgment call from the noble Baroness. This discussion is not about how much people do or do not like Bills. What is clear is that Committee and Report stages are lasting an awful lot longer, and that goes back to my first point about the constant repetition of the same point.

Lord Alton of Liverpool: Does the noble Baroness not agree—I made this point to her at about 12.30 am—that important debates on the detention of women and pregnant mothers were questions that were not dealt with in a repetitious way? They were important issues, raised by her own Government Benches as well. I appealed to her and the Leader of the House last night that, rather than keeping us here until the early hours of morning, another day will be necessary for the Bill. The Minister is right that the issue is not whether or not you are in favour of the Bill; this is about the way that Parliament does its business and the reputation of Parliament. It is important, therefore, that time is made available so that we can complete this—maybe even with a morning sitting as well, if necessary, rather than keeping Members of your Lordships’ House here until the early hours. Whether we are responsible for that ourselves or whether it is the Government is not the point; we should not be here in the early hours of the morning dealing with important and controversial questions.

Baroness Williams of Trafford: I refer the noble Lord to my previous comments; I will not repeat myself and make them again. I point out that the first group yesterday was, in essence, the same as the previous group on Monday night, and it took one hour and 43 minutes to make exactly the same points.

Lord Forsyth of Drumlean: In my noble friend’s discussions with the usual channels, will she make the point that there are some conventions in this House? I have watched debates, even on Report, where noble Lords—not looking in any particular direction—read out speeches for 14 or 15 minutes which were not actually on the subject concerned. That is unfair to our Ministers.
I remind those outside who are so quick to criticise the House of Lords that, this Tuesday, the House of Commons finished at 2.30 pm, while we sit into the early hours because this House does a proper job. However, it cannot do its job if noble Lords do not observe the conventions and operate in accordance with our rules.

Baroness Williams of Trafford: Maybe my noble friend brings up a beneficial point at this time. We are very patient and courteous but the reading of speeches irritates the House. If I may express my own opinion, quite often that happens when the speaker has not listened to the previous speech.

Lord Brownlow of Shurlock Row: I agree with everything my noble friend said. I was one of the Peers here—there were about 80 of us for the majority of the time. I put on record my sincere thanks to all the House staff who supported us, such as the doorkeepers and so on.

Baroness Williams of Trafford: I second that. They are absolutely wonderful.

Lord Scriven: Can the noble Baroness respond to what the noble Baroness, Lady Smith, said? One of the reasons why a lot of questions have been asked, over and again, is because of the lack of an impact assessment, which is absolutely vital for this House to do its job. Will the impact assessment be available to the House before Report?

Baroness Williams of Trafford: The noble Lord completely underlines the point that the noble Baroness, Lady Smith, made.

International Criminal Police Organisation (Immunities and Privileges) Order 2023
 - Motion to Approve

The Earl of Courtown: Moved by The Earl of Courtown
That the draft Order laid before the House on 20 April be approved. Considered in Grand Committee on 5 June.
Motion agreed.

Justice and Security (Northern Ireland) Act 2007 (Extension of Duration of  Non-jury Trial Provisions) Order 2023
 - Motion to Approve

Lord Caine: Moved by Lord Caine
That the draft Order laid before the House on 24 April be approved.
Relevant document: 38th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 5 June.
Motion agreed.

Medical Devices (Amendment) (Great Britain) Regulations 2023
 - Motion to Approve

Lord Markham: Moved by Lord Markham
That the draft Regulations laid before the House on 27 April be approved.
Relevant document: 38th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument). Considered in Grand Committee on 5 June.
Motion agreed.

Financial Services and Markets Bill
 - Report (2nd Day)

Relevant document: 23rd Report from the Delegated Powers Committee

Amendment 11

Baroness Penn: Moved by Baroness Penn
11: After Clause 24, insert the following new Clause—“Competitiveness and growth objective: reporting requirements(1) Each regulator must make two reports to the Treasury on how it has complied with its duty to advance the competitiveness and growth objective.(2) The reports prepared by each regulator under subsection (1) must in particular explain—(a) the action taken by the regulator to ensure that the competitiveness and growth objective is embedded in its operations, processes and decision-making, and(b) how any rules and guidance that the regulator has made advance that objective.(3) The first report under this section must be made before the end of 12 months beginning with the first day on which section 24 of this Act comes into force, and must relate to that period.(4) The second report under this section must be made before the end of 24 months beginning with the first day on which section 24 of this Act comes into force, and must relate to the period beginning with the day on which the first report is published.(5) The Treasury must lay a copy of each report prepared under this section before Parliament.(6) Each regulator must publish its reports prepared under this section in such manner as it thinks fit.(7) In this section—(a) “regulator” means the FCA and the PRA;(b) references to the competitiveness and growth objective, and the duty to advance that objective, are—(i) in relation to the FCA, references to its objective in section 1EB of FSMA 2000 and to its duty to advance that objective under section 1B(4A) of that Act, and(ii) in relation to the PRA, references to its objective in section 2H(1B) of FSMA 2000 and to its duty to advance that objective under section 2H(1)(b) of that Act.”Member’s explanatory statementThis amendment would insert a new Clause to ensure that the FCA and the PRA, in addition to their annual reports, each provide for two consecutive years a report on the new competitiveness and growth objective, as inserted into the Financial Services and Markets Act 2000 by Clause 24 of the Bill.

Baroness Penn: My Lords, as your Lordships know, the Bill delivers the outcomes of the future regulatory framework, or FRF, review. It repeals hundreds of  pieces of retained EU law relating to financial services and, as we have discussed, will give the regulators significant new rule-making responsibilities. The Government have been clear that these increased responsibilities must be balanced with clear accountability, appropriate democratic input and transparent oversight. The Bill therefore introduces substantial enhancements to the scrutiny and accountability framework for the regulators.
Following Grand Committee, the Government have brought forward a series of amendments which, taken together, seek to improve the Bill through further formalising the role of Parliamentary accountability, supporting Parliament through independent analysis and scrutiny, and increasing reporting and transparency to drive overall accountability. The group we are now debating covers proposals aimed at increasing reporting and transparency to drive overall accountability. I look forward to discussing the Government’s other amendments on accountability later today.
There has been significant interest in ensuring sufficient reporting, in particular of how the FCA and PRA are operationalising and advancing their new secondary competitiveness and growth objectives. The regulators are required to publish annual reports setting out how they have advanced their objectives, which are laid before Parliament. Clause 26 ensures that, in future, these reports must also set out how they have advanced the new secondary objectives.
Clause 37, introduced following the debate in Commons Committee, enables the Treasury to direct the FCA and PRA to report on performance where that is necessary for the scrutiny of their functions. To further support transparency, the Government published a call for proposals on 9 May, seeking views on what additional metrics the regulators should publish to support scrutiny of their work advancing their new objectives. This closes on 4 July.
The Government have been clear that they expect there will be a step change in the regulators’ approach to growth and competitiveness following the introduction of the new objectives, while maintaining high regulatory standards. It will therefore be important to have detailed information available to scrutinise how the regulators embed their new objectives into their day-to-day functions.
The Government have therefore tabled Amendment 11, which will require the FCA and the PRA to produce two reports within 12 and 24 months of the new objectives coming into force. These reports will set out how the new objectives have been embedded in their operations, and how they have been advanced. Once the new objectives have been embedded, it is appropriate that the regulators report on them in the same way as their other objectives, through their annual reports.
The Government have also heard the calls for further transparency to drive overall accountability in other areas of the regulators’ work. Clauses 27, 46 and Schedule 7 require the regulators to publish statements of policy on how they will review their rules. The Government’s response to the November 2021 FRF review consultation set out the regulators’ commitment  to providing clear and appropriate channels for industry and other stakeholders to raise concerns about specific rules in their rule review framework.
Reflecting representations made during my engagement with noble Lords between Grand Committee and Report, the Government have tabled Amendments 20, 52 and 56, which strengthen this commitment. The amendments will place a statutory requirement on the regulators to provide a clear process for stakeholders, including the statutory panels, to make representations in relation to rules and a statutory requirement to set out how they will respond.
I hope that noble Lords will support these amendments, which seek to provide Parliament, the Government and stakeholders with the relevant information to effectively scrutinise the regulators’ performance and drive overall accountability. I therefore beg to move Amendment 11, and I intend to move the remaining government amendments in this group when they are reached.

Lord Holmes of Richmond: My Lords, it is a pleasure to take part in the second day of Report. I declare my financial services interests as set out in the register. I thank my noble friend the Minister and all the Treasury officials for their engagement during and particularly after Committee with the issues in this group of amendments.
I will speak to Amendments 12, 19, 40, 41 and 92 in my name. Noble Lords with an eagle eye on the Marshalled List will note that there is more than a similarity between the amendments I tabled in Committee and in this group, and the government amendments. I thank the Government sincerely for taking on board not just the issues but also my wording.
Ultimately, as the Minister said, this is one of the most significant changes to financial services regulation in a generation. It is important that, in structuring the role of the regulator, we have at this stage the right level of scrutiny and the right requirements for the regulators to provide the information required at the right time to undertake that scrutiny.
The arrival of the international competitiveness objective is a positive thing within the Bill. These amendments give scrutiny the right opportunity to see how that objective is operationalised. Does the Minister agree that it is important to look at every element of information and the timeliness of all the elements being given to both financial services regulators to enable the right level of scrutiny to take place? To that extent, I ask her to comment particularly on Amendment 92, alongside my other amendments, because this seems like no more than the base level of detail that one would want to be able to form that crucial scrutiny function.
Having said that, I am incredibly grateful to the Minister, the Government and all the officials for taking on board so many of the issues and the wording from Committee, and bringing them forward in this group.

Lord Forsyth of Drumlean: My Lords, I find myself in the very odd position of having to say that the Government have handled Committee stage consideration of the Bill brilliantly. The Minister listened  to a lot of quite robust criticism of the Bill, some of it from me, on the issue of accountability. It is fair to say that, across all sides of the Committee, there was a feeling that it was essential that there be proper accountability and scrutiny, given that we are, in effect, giving the regulators all our financial services legislation. She spent a great deal of time talking to all noble Lords in Committee and listening to those concerns. I therefore support the government amendments and thank her and her colleagues for the brilliant way in which they responded to what was a very robust Committee.

Lord Eatwell: My Lords, there is a certain amount of confusion about the competitiveness objective and it is important to clarify it in discussion on Report. To illustrate this point, we have to understand that London is a rather peculiar financial centre, because it has a very limited hinterland of domestic savings. It is unlike the United States, where New York has a huge hinterland of domestic savings. It is therefore necessary for London to attract savings and funding from around the world, and it does that brilliantly well.
An important component of that is that London is seen as a well-regulated and efficiently regulated centre. The primary objectives set out in FSMA of maintaining market confidence, financial stability, public awareness, protection of consumers and the reduction of financial crimes are competitiveness goals in and of themselves. They make London more competitive and are a crucial component of the success of London at attracting funds from around the world.
The competitiveness objective that was introduced as a subsidiary objective is rather different, because there competitiveness means being allowed to take more risk. As everyone knows, in financial affairs the balance of risk and return is one of the key elements in making sensible decisions. This is true as much in regulation as it is in the operation of financial services business. It is particularly true in regulation when it applies to systemic risks, which only the regulator can understand and deal with.
It is therefore important that we do not overegg the competitiveness objective. It is important—it has introduced an important element in discussing the relationship between risk and return—but we should recognise that the primary objectives are the key to London’s competitiveness as a financial centre.

Lord Vaux of Harrowden: My Lords, I will comment briefly on government Amendment 11. The competitiveness and growth objective is a long-term, ongoing objective and, with the best will in the world, it is highly unlikely that we will see any discernible change in measurable competitiveness or growth in just two years. The objective does not end in two years and yet the amendment put forward by the Government has only two years’ worth of reporting.
As usual, the noble Lord, Lord Holmes of Richmond, has put together an elegant solution in Amendment 12, which would create an ongoing annual reporting requirement, as well as being a bit more specific about what should be included within the reports. I understand from the Minister’s earlier speech that she  expects this to be covered off in the normal annual reporting thereafter, and I think we can probably live with that.
I will add to the comments made by noble Lord, Lord Eatwell, with this caveat: I support the competitiveness and growth objective, but only as a secondary objective. The primary objective of stability must remain paramount. Can the Minister confirm that, as part of the reporting on the competitiveness and growth objective that is expected, the regulators will consider and report on the impact it is having on the primary stability objective? The two are not unconnected, as we have just heard, and it is really important that when we report on one, we also report on its impact on the other.

Viscount Trenchard: My Lords, I declare my interests as a director of two investment companies, as stated in the register. I agree to some extent with what the noble Lord, Lord Eatwell, said, but I am not sure I can agree that the United Kingdom’s financial markets are uniquely peculiar in any sense. It is true that we do not have such a large domestic hinterland as the United States, but compared with financial centres such as Switzerland and Singapore, we have a rather larger domestic hinterland. I do not think what he said is therefore so relevant as he perhaps believes.
Furthermore, I agree that our high standards and what used to be called “my word is my bond”, which was what I was taught on day one when I went to work for Kleinwort Benson in the City, are very relevant. We have always been proud, and rightly so, of the very high standards and honourable way, in the main, in which our financial institutions have conducted their business. Indeed, competitiveness of the market depends, to a degree, on maintaining those high standards. But competitiveness also depends on having clear, comprehensible and proportionate regulation, and in recent years our regulation has become too cumbersome, particularly after the FSA was split into two regulators. If you are a dual-regulated company, it is a nightmare to have to report much the same information but in different formats to the two regulators. This is why the time spent by executive committees of operating financial companies in the City is so greatly taken up by compliance, reporting and regulatory matters, rather than innovation and the development of new businesses to attract more international companies to do their business in London, thus providing more revenue for the Exchequer and more jobs for British people, and indeed for non-British people to come and work here.
I support the Government’s amendments to strengthen the reporting requirements of the regulators, and Amendments 40 and 41 tabled by my noble friend Lord Holmes of Richmond. I agree with those noble Lords who have thanked the Minister most sincerely for her response to concerns expressed across the House about accountability and scrutiny. However, the British Insurance Brokers’ Association has expressed concern that the Bill, as drafted at present, largely allows the regulators to decide how to fulfil the reporting requirements for the competitiveness and growth objective.
Clause 37 acts as a backstop that allows the Treasury to compel additional reporting. What assurances can the Minister give that the Government’s response to the ongoing consultation on the appropriate metrics for the regulators to publish will lead to concrete changes to which metrics are published, given that the Bill will have been passed by the time the Government respond to the consultation? Given that it will not be possible to include any details of specific metrics or how the Treasury will exercise its powers in Clause 37 in primary legislation, how can the Government ensure that the consultation will lead to a sufficient challenge to the regulators, allaying concerns about them marking their own homework in their reporting? Will the Minister also give assurances that the Government’s response to the consultation will reflect the parliamentary debate in this area, where noble Lords have consistently stressed the need for extensive metrics to be published by the regulators with regard to the new objectives?

Lord Davies of Brixton: My Lords, I do not want to run the risk of repeating myself, but I have made plain in previous debates my concern about the inclusion of the competitiveness objective in this legislation. Just to be clear, I think it has no place, but I welcome these provisions that there should be a report on the competitiveness objective. My concern is that the wording does not get to the heart of the problem that I believe exists, which is the interaction between the competitiveness objective and the other objectives. My reading of the way this is worded is that the report just has to talk about the competitiveness objective and does not have to say how it affected the other objectives. Maybe the Minister in her reply could allay my concerns and make it clear that the regulatory bodies are required to look across the whole gamut of their obligations when reporting on the competitiveness objective.

Lord Ashcombe: My Lords, I remind the House of my interest as an employee of Marsh Ltd, the insurance broker. I offer my support to the amendments in this group, so thoughtfully proposed by my noble friend Lord Holmes of Richmond. My noble friend the Minister has indeed made improvements since Grand Committee, and for that I thank her, but I wonder whether the Government have gone quite far enough. I particularly thank the Minister for the generous amount of time she spent with me the other evening.
My noble friend the Minister’s amendment proposes two reports, 12 months apart, as has been mentioned, but I believe that it is important that reports from the regulators should become an annual occurrence concerning the competitiveness and growth objectives. The financial sector of the United Kingdom is a major driver of revenue for the country and we must ensure consistency over time, not just the immediate future. In turn, this suggests the need for consistent metrics on which to report, allowing for the proper comparisons.
Amendment 19 concerns the principle of proportionality, recognising that not all financial services are the same. Again, I will look at the insurance market in particular, but I suspect there are similarities in other financial lines. I am all for keeping individual retail and small business customers safe when working  with insurance companies, but there are significant differences to be found between them, users of the London wholesale insurance market—which is used by knowledgeable buyers, using one of many potential advisers—and captive insurance entities. Smaller customers need a level of protection not required by either of these other two groups.
In the debate on this amendment, I wish to refer particularly to captive insurance companies. Captives are wholly owned subsidiaries set up to provide risk mitigation services—insurance—for their parent company and/or related entities. The parent is inevitably a sophisticated entity, almost certainly hiring advisers. They should require a very different approach from the retail customer.
There currently seems to be a one-size-fits-all approach by the regulators when reviewing insurance companies that does not take into account the nature of the purchaser. This is not only time consuming but costly in comparison with other overseas regimes. Captives provide low risk to the financial system and the buyer of their services requires a significantly different level of regulation from an insurance company trading with individuals. They are fundamentally different.
There is no captive company authorised in the UK and even those of our major companies, including UK public bodies, are located in overseas jurisdictions. The captive insurance business generates in excess of $50 billion annually, and here lies a significant opportunity for growth in the insurance sector which, should the regulator alter its stance and act with proportionality, could, as an example, add significant additional capital into the country.
Amendments 40 and 41 refer to the requirements to publish regulatory performance on authorised firms and new authorisations. The Government certainly recognise in Clause 37 the need to improve the regulatory culture, but we need more teeth in terms of reporting metrics so it becomes standard practice within the regulators. This culture needs to become ingrained.
The metrics being proposed in Amendment 40 are granular concerning timing and would bring some needed haste to the system. In business, time is often of the essence and being held up disproportionately by a UK regulator, as opposed those in other jurisdictions, acts as a deterrent to trade in this country. The metrics being proposed in Amendment 41 link together to give a consistent window into the activities of the regulators. With quarterly reporting it will be possible to gain some comparative statistics that will tell a story.
Lastly, Amendment 92 concerns determination of application. London remains one of the world centres of insurance and we must do all we can to preserve its status, but there are for sure a number of other locations that can attract capital more easily and so challenge it. Unfortunately, regulatory burden is regularly raised as an issue damaging London’s ability to attract additional capital and support the market.
Concerns have been raised about the overall performance of the regulators in terms of timing, with authorisations and approvals taking longer they should. It is recognised that they are falling behind their KPIs. Insurance companies here have experienced delays in case handler assignment, which is the beginning of a  domino effect. In addition, concerns have been expressed over some of the questions asked and the appropriateness of the data being requested, leading to additional time and expense. The regulators need to streamline their activities by being relevant.
These amendments refer to a great extent to measures designed to bring some more accountability to the reporting by the regulators. I realise there is a consultation with the financial markets, but I believe that the measures being proposed are the bare minimum that should be required and included in the Bill. These sets of metrics will prevent the regulators deciding which of their own sets of data to publish. Certainly, from an insurance perspective, this will allow life to proceed way more freely. This will ensure transparency from the regulators, which is surely what is being strived for.

Baroness Kramer: My Lords, the amendments in this group fall essentially into two categories. Those that improve communication and representation to statutory panels are small but positive improvements and, although I remain of the view that these panels should be given proper independence, I am glad to see that at least there is some improvement in the regime.
The other amendments I view very differently, and I will pick up the issues raised by the noble Lords, Lord Vaux and Lord Davies of Brixton, that if the reporting requirements included a proper consideration of how the competitiveness and growth objectives as they became operational were also impacting on financial stability, systemic risk and consumer protection, I would find myself very much in favour of them. But actually I regard them as a sort of slightly disguised mechanism to enhance the status of the secondary objectives to something which I think the noble Lord, Lord Eatwell, described on Monday as “secondary plus”, or even “secondary plus plus”. I think that is exactly what these various amendments are intended to do.
This House knows well that I join Sir Paul Tucker, Sir John Vickers, pretty much every former Governor of the Bank of England and many others in regretting the introduction of these objectives because, for exactly the reason that others have said, they will incentivise and drive risky behaviour and we will come to rue that. So this further enhancement of these secondary objectives, very much driven by the industry—we heard from the noble Lord, Lord Ashcombe, how strong the feeling was that we try and get towards making these objectives either primary or close to primary—should be a warning to all of us. So I cannot give these amendments my support, although we are obviously not going to vote on them today. However, it is necessary that the House takes note of some degree of warning.

Lord Forsyth of Drumlean: My Lords, I realise that we are on Report, but I should have declared my interest as chairman of Secure Trust Bank. I understand that it is not enough to have done so in Committee; it needs to be done at each stage.

Lord Livermore: My Lords, I will be very brief so as not to detain the House further. Much of the substance of these issues was debated in the  previous group on Tuesday evening, when I said that we strongly support the inclusion in the Bill of the new secondary objective for the regulators of international competitiveness and economic growth.
While the introduction of this secondary objective is a positive step, it is also important to ensure that it is meaningfully considered in the regulators’ decision-making. One of the main ways of doing this is by introducing some proven accountability measures to require the regulators to report on their performance against the objective. We therefore welcome the government amendments in this group, which will provide for initial reports on implementation of the competitiveness and growth objective, as well as other provisions that seek to improve regulatory accountability.

Baroness Penn: My Lords, I thank all noble Lords for that constructive debate and I seek to engage only with the points that have been raised.
I agree with the noble Lord, Lord Eatwell, that high regulatory standards are a key to London’s and the UK’s competitiveness as a financial centre. That is why the growth and competitiveness objective is a secondary objective to the primary objectives already in existence. However, high regulatory standards are not the only contributor to the growth and competitiveness of our economy or the sector. The new secondary objective, therefore, has an important role to play.
To address specifically the concern expressed by the noble Lord, Lord Eatwell, on day one of Report—the noble Baroness, Lady Kramer, reflected on that again today—that the government amendments in this area somehow seek to elevate the secondary objective from its position within the hierarchy, that is not the case. These amendments reflect the fact that they are new objectives for the regulators and it is right that we have a focus on new objectives being added through the Bill to understand how they are being embedded into the operation of the regulators.
The noble Lords, Lord Vaux and Lord Davies of Brixton, asked how the reporting will take into account the fact that the objectives are secondary and how they will impact on the primary objectives. It is in the structure of the objectives that the growth and competitiveness objective can be delivered only in the context of achieving the primary objectives. That is built into the system. Each year, in addition to these two reports provided for in our amendment, there will be the annual report from the regulators looking at their delivery across all their objectives.
Several noble Lords asked whether having a report on this specific objective for just two years was the right approach. We think it strikes the balance between reflecting the new nature of these objectives and, over time, integrating them into the working of the regulators and reporting them in future annual reports. However, I point out to noble Lords that the Government have the power to specify certain matters to be addressed in those annual reports if we think it necessary in future. Under Clause 37, we also have the power to require further reporting on certain matters, so if the Government felt that further focus on the embedding of these new objectives was needed, there are powers in the Bill that would allow that to be drawn out.
My noble friends Lord Trenchard and Lord Ashcombe, and others, raised concerns about the need for specific metrics for reporting the regulators’ delivery against their objectives, as set out in my noble friend’s amendment. As noble Lords recognise, that is exactly the purpose of the Government’s current call for proposals. We do not think it is right to have the metrics in the Bill, because that would hinder the objectives that my noble friends are talking about, in terms of having the best possible set of metrics that can be adapted and updated to ensure that Parliament, industry and the Government get the information that they need on the regulators’ performance.
My noble friends Lord Holmes and Lord Ashcombe also drew attention to Amendment 92 in this group. I am aware that the speed and effectiveness with which the regulators process applications for authorisation remains an area of concern for both Parliament and industry, and the Government share those concerns. In December, the Economic Secretary to the Treasury wrote to the CEOs of the PRA and the FCA, setting out the importance of ensuring that the UK has world-leading levels of regulatory operational effectiveness. Publishing more and better data detailing the FCA and PRA’s performance is critical to meeting these aims. That is why, in their reply to the Economic Secretary’s letter, both CEOs committed to publishing more detailed performance data in relation to authorisation processes on a quarterly basis.
On 19 May, both the FCA and the PRA published their first set of enhanced quarterly metrics relating to their authorisations performance, including the average time taken to process applications. The reports demonstrate that the regulators, particularly the FCA, are making progress towards meeting service-level targets, while recognising that there are further improvements to be made on some measures. The Government will continue to monitor this data to assess performance and discuss continuing efforts to improve operational efficiency with the regulators.
I am glad to have heard the general support for the Government’s amendments in this group. As my noble friend Lord Holmes said, we drew heavy inspiration from his contributions in Committee, and those of other noble Lords.
Amendment 11 agreed.
Amendment 12 not moved.

Amendment 13

Lord Holmes of Richmond: Moved by Lord Holmes of Richmond
13: After Clause 24, insert the following new Clause—“Financial Inclusion Objective for the FCA(1) FSMA 2000 is amended as follows.(2) In section 1B (FCA’s general duties), after subsection (4A) insert—“(4B) When discharging its general functions in the way mentioned in subsection (1) the FCA must, so far as reasonably possible, act in a way which, as a secondary objective, advances the financial inclusion objective (see section 1EC).”(3) After section 1EB insert—  “1ECFinancial Inclusion ObjectiveThe financial inclusion objective is: facilitating as far as is practical, the inclusivity of the UK’s financial system.””

Lord Holmes of Richmond: My Lords, there are currently quite a few difficulties with the UK economy, but one that seldom gets the focus, attention and commentary that it requires is the lack of financial inclusion for so many people right across the United Kingdom. At its extreme, it is best summed up as: those who have the least are often forced to pay the most for financial services and products. However, it is a question not just for individuals but for micro and small businesses, which can find themselves effectively financially excluded.
Amendment 13 simply seeks to introduce a secondary objective for the FCA on financial inclusion. It would not in any sense fetter any of the other objectives, not least the primary objectives. It could operate effectively and efficiently within that current stream of objectives for the regulator.
Without in any sense seeking to pre-empt my noble friend when she comes to wind up, I think that she may well say that it is not the right approach to introduce a new objective for the financial service regulators without first undertaking a significant and serious consultation. That is a fair point. If she is unable to accept my Amendment 13, would she agree to take away the opportunity and possibility to launch the consultation into a secondary objective for our financial service regulators on financial inclusion? I beg to move.

Lord Davies of Brixton: My Lords, my Amendment 14 proposes a new clause to the objectives, adding the principle of protecting the mental health of consumers. I set this out at some length in Committee, and I think it is worth repeating the point. I should perhaps say at the beginning that I support the other two amendments, although I prefer the one from my Front Bench. I would like to see an explicit statement that the concept of financial inclusion extends to people who have problems dealing with financial services because of problems with their mental health.
Financial services have to understand and recognise the nature and scale of the mental health problems faced by some people. They need to be placed under an explicit duty of care to their customers who suffer from these problems, and they should be required to take explicit additional steps to minimise the potential difficulties faced by those who have or are at risk of having mental health problems associated with their finances.
I am sure that all noble Lords accept the principle that financial regulation should pay regard to the problems faced by people who have problems with mental health. It goes almost without saying. The issue is not about the principle but about whether it should be referred to explicitly in this bit of the legislation. I think that it should, but I am willing to take small mercies if the Minister can make clear the explicit and implicit responsibilities on the regulators to undertake to provide this sort of support and explanation for people who have mental health problems.
The experience works both ways: financial problems lead to mental health problems, and people with mental health problems have difficulty in handling their finances. That is an established fact. I ask for general support for the principle and an indication that, one way or another, the legislation will provide these people with the support they require.

Baroness Chapman of Darlington: My Lords, I thought it might be useful to speak at this point to introduce Amendment 18, the amendment in my name in this group. I have taken part in many discussions in this House on financial inclusion. It is to this House’s credit that such a keen interest is taken by Members on all sides on this topic. Financial exclusion is a priority concern for the Labour Party. It is often caused by the way that financial products are designed and marketed. Of course, poverty and the cost of living crisis plays a huge part in this: they mean that the poorest often pay more in fees for products, but there are even things like mobile phones not being available on a contract unless you have a bank account. We know that all these issues can make life more expensive for people who can least afford it.
I am very grateful to the noble Lord, Lord Holmes, and my noble friend Lord Davies of Brixton for their amendments and the way in which they introduced them. I agree with everything they said. Their contributions highlighted the importance of ensuring that our financial system is inclusive and understanding of the challenges that consumers face.
Many challenges relating to financial inclusion, and their consequences on mental health, have become even more apparent in recent years. Various financial inclusion amendments were tabled and debated in Committee. It was apparent to us that although the Government say that they recognise and share our concerns, and those of many consumer organisations, they do not seem willing at this point to match the ambition that we have.
To get the previous Financial Services Act through, the Government ultimately conceded on giving the FCA a consumer duty, but this stopped short of a full duty of care towards consumers and required a lengthy consultation process. None the less, it was a positive step in the right direction. We welcome the steps being taken by the FCA to implement its consumer duty, but organisations such as Fair By Design have rightly pointed out that its scope is limited and that not all financial inclusion issues will be adequately addressed, even once it is fully in force.
We completely understand the desire of the noble Lord, Lord Holmes, for a secondary objective in the style of the new competitiveness objective we have been debating. However, it seems that the Treasury and the FCA are in a bit of a standoff over this, with each saying that it is for the other to act. With that in mind, we think that our “have regard” proposal is a realistic way forward and hope that the Government might be tempted by it. It would provide an important additional tool for the FCA, ensuring that it explores financial inclusion issues across its work and properly considers the inclusion implications of its policy interventions.
As Fair By Design and many others have observed, a formal requirement for the FCA to have regard to issues around financial inclusion would accelerate change where it is so badly needed by less well-off households. My Amendment 18, supported by the noble Baroness, Lady Tyler, would not close the financial inclusion gap overnight, but it would become a tool in the arsenal and accelerate change in a number of important areas where the Treasury and the FCA sadly have so far been too slow to act. We will of course listen to the Minister’s response, but as things stand we are minded to test the opinion of the House on this amendment.

Baroness Bennett of Manor Castle: My Lords, I have attached my name to Amendment 14 in the name of the noble Lord, Lord Davies of Brixton, who very powerfully introduced it. I associate myself with all his comments. Essentially, he was talking about reasonable adjustments for people with mental health conditions in dealing with the financial sector.
I will briefly address this consumer protection objective from the other side, which is that the financial sector should not make people ill. I am sure the Minister will recall the meeting we had a couple of months ago with mortgage prisoners. At that meeting, we heard some testimony about the impacts of how people had been trapped in the system and suffered enormously as a result.
I want to reflect on two things. The first is the figures that have come out since Committee and the fact that the head of UK Finance has labelled the UK the fraud capital of the world, with fraud last year estimated at £1.2 billion. That reflects the fact that very many people now approach any interaction with the financial sector with a sense of fear, asking, “Is this true?”, “Is this right?”, “Is this a proper email?” This is something that the financial sector needs to do more to address so that people are not suffering that stress and pressure.
The second thing is that I know some individuals who are somewhat older than me who find that there is an inability to walk into a branch and deal with an issue by having a person solving your problems face to face. People spend weeks and weeks trapped in cycles of emails and phone calls. No one can ever solve your problem and you never speak to the same person twice. That has serious impacts on people’s lives and well-being. We need to acknowledge that and say to the banks that this is not acceptable and not good enough.
On the financial inclusion amendments, I have spoken about this at some length so I will not go over the same ground. However, it is clear, in all the amendments in this group, that the financial sector is not meeting the needs of our society. As a Parliament, we need to ensure we do more to make sure that it does.

Lord Eatwell: My Lords, I support Amendment 18 in the name of my noble friend Lady Chapman, while also recognising the contribution made in the amendments tabled by the noble Lord, Lord Holmes, and my noble friend Lord Davies.
This is an extremely urgent matter because between 6 million and 7 million of our fellow citizens conduct all their financial affairs in cash. Cash is becoming  increasingly unacceptable in a whole series of financial transactions that are conducted by electronic means. This means that cash is ceasing to be money, because money is something which is generally accepted in payment of a debt. If you cannot use cash to buy things, it is no longer money.
It is therefore necessary for both the Bank of England and the Treasury to consider making available to all citizens in this country a means of electronic payment. That is a big challenge, but it is urgent because we are all aware that, over the next decade, virtually everything will be entirely electronic and cash will be unacceptable in most transactions. My noble friend Lady Chapman has hit the nail right on the head by saying that this is a consumer protection objective. That 10% of our fellow citizens needs to be protected by financial inclusion in this way. This is an urgent matter which should not be postponed.

Baroness Kramer: My Lords, in speaking to this group I am channelling my colleague, my noble friend Lady Tyler of Enfield, who is unwell and, to her distress, cannot be here. I will focus on Amendment 18, which she has signed, which would require the FCA to have regard to financial inclusion within the consumer protection objective. My noble friend Lady Tyler chaired the Select Committee on Financial Exclusion in 2017 and this was a cornerstone recommendation. A further Lords review in 2020 came to the same conclusion, as did the Treasury Select Committee in 2022.
My noble friend Lady Tyler made a powerful speech in Committee so I will not repeat the detail, but I will cite the briefing I have received from Fair4All Finance, which finds that more than 17 million people—I previously used the number the noble Lord, Lord Eatwell, used of between 6 million and 7 million people who are under stress for this—in the UK are in financially vulnerable circumstances, with access to credit being increasingly difficult. We will discuss access to cash later.
Endless years of discussion on this topic have failed to significantly move the dial. Basic bank accounts are a little improved but still limited. The hopes for credit unions or fintech solutions have faded. Frankly, nothing will change unless the FCA puts its shoulder to the wheel. Amendment 18, if noble Lords look at it in detail, is not the introduction of a new objective; it is a clarification of the consumer objective through a “have regard” duty. In that way, it is different from the amendment proposed by the noble Lord, Lord Holmes—which I do not object to, but the Government have frequently said that we cannot have additional objectives. This is not an additional objective; it is clarification and emphasis of a key aspect of an objective.
Amendment 18 does not ask the FCA to step into territory which the Government have said is theirs—to close the gap on financial inclusion—but to use powers within its existing scope, which it has shown us it will not do without this emphasis from Parliament. I very much support Amendment 18 and consequently hope that the noble Baroness, Lady Chapman, will ensure that it is tested in the House if the Government do not accept it—although government acceptance is of course the preferred route for us all.

Baroness Penn: My Lords, the Government are committed to ensuring that people, regardless of their background or income, have access to useful and affordable financial services and products. We work closely with the FCA in pursuit of that goal.
The FCA’s strategic objective is to ensure that relevant markets function well. Its operational objectives are to secure an appropriate degree of protection for consumers, to protect and enhance the integrity of the UK financial system and to promote effective competition in the interests of consumers. The FCA’s objectives are at the very core of its work, and it is its statutory remit to advance those objectives. While I therefore commend the intention behind Amendments 13 and 18, the FCA’s objectives should not be changed lightly and without detailed consultation, given the potential for unintended consequences for the way financial services are regulated in the UK.
Noble Lords will be aware that the new secondary growth and competitiveness objectives introduced by the Bill were the subject of in-depth consultation in several stages, to ensure that the legislation will have its intended effect. While some respondents to that consultation process raised the issue of requiring the regulators to have regard to financial inclusion, there was no consensus on this proposal in terms of approach or effect.
My noble friend invited me to take up the opportunity to consult further on this matter, anticipating what I might say. However, as I have just reflected, this was, in part, considered in the work that was done in the lead-up to the Bill, which took place over several years, and we have been considering the Bill before us for nearly a year. So, while I have heard the views raised in this debate, there has also been a strong feeling over the course of the Bill that there is a desire for the Government and regulators, once we have the Bill in place, to press ahead and use the powers in it to deliver regulatory reform. I do not think that further consultation on further changes to the objectives at this stage would be the right approach.
As I said, this was considered as part of the FRF review. Indeed, in its consideration of these matters, the Treasury Select Committee specified in its future of financial services regulation inquiry that it did not recommend that any changes related to financial inclusion should be made to the regulator’s objectives, noting that financial inclusion is a broader social issue and that the primary role of the FCA should not be to carry out social policy.
The FCA’s consumer protection objective requires it to protect consumers from poor conduct by financial services firms. Financial exclusion is driven by many factors which may not be attributable to firms’ conduct. Given this, the consumer protection objective is not the appropriate place to seek to address financial inclusion. Indeed, an objective to protect consumers from harm may, at times, be in tension with an objective to increase financial inclusion. For example, certain credit products or investments may not be appropriate in all circumstances and could be detrimental to a consumer’s financial situation and well-being. The FCA will already seek to balance this through developing its rules and interventions, but that means that adding  a formal requirement to advance financial inclusion as part of the consumer protection objective risks adding complexity and uncertainty to one of the most important parts of the FCA’s work.
Where there are gaps in the market which mean that some consumers struggle to access appropriate products, it is right that the Government seek to tackle these. I hope that noble Lords will be reassured that we are taking, and will continue to take, action. The noble Lord, Lord Eatwell, spoke of the importance of cash to many. That is why the Government are taking unprecedented action in the Bill to protect access to cash.
The noble Baroness, Lady Kramer, referred to—

Lord Eatwell: I actually said the opposite; access to cash will not be useful if the cash cannot be used to make a transaction. Increasingly, transactions cannot be made with cash but only electronically.

Baroness Penn: Some of the implications of the noble Lord’s contribution on potentially obliging people to use certain payment systems show that including financial inclusion under the consumer protection objective could have quite far-reaching consequences that we would want fully to think through and consult on before changing the objectives. That lies behind the Government’s concern about this approach.
As I was saying, this does not mean that there is no action to promote financial inclusion by the Government and the regulators. Major banks are required to provide basic bank accounts for those who would otherwise be unbanked. As of June last year, there were 7.4 million basic bank accounts open and during 2020-21 around 70,000 basic bank account customers were upgraded to standard personal current accounts, graduating to more mainstream financial services products. The FCA’s financial lives survey has shown that those aged over 75 are becoming more digitally included, with 64% digitally active in 2020 compared to 41% in 2017. However, we absolutely recognise that there is more work to be done in this area. The Government have allocated £100 million of dormant asset funding to Fair4All Finance, which is being used to improve access to affordable credit, with a further £45 million allocated recently to deliver initiatives to support those struggling with the increased cost of living.
While the FCA has an important role to play in supporting financial inclusion, it is already able to act where appropriate. For example, it has previously intervened in the travel insurance market to help consumers with pre-existing medical conditions access affordable cover. As the noble Baroness, Lady Chapman, recognised, the new consumer duty developed by the FCA is yet to come into force and we are yet to feel the full benefits of that. However, importantly, these issues cannot be solved through regulation alone. Where there are gaps in the provision of products to consumers, the Government will continue to work closely with the FCA and other key players across industry and the third sector to address them.
I turn to Amendment 14 from the noble Lord, Lord Davies of Brixton. I reassure him that the FCA is already well placed to take into account the protection  of consumers’ mental health within its existing objectives. The regulator’s vulnerability guidance sets out a number of best practices for firms, from upskilling staff to product service and design, and specifically recognises poor mental health as a driver of consumer vulnerability. Where FCA-authorised firms fail to meet their obligations to treat customers fairly, including those in vulnerable circumstances, the FCA is already empowered to take further action. Since the publication of the vulnerability guidance, the FCA has engaged with firms that are not meeting their obligations and agreed remedial steps.
In summary, the Government believe that this is an incredibly important issue but consider that it is for the Government to lead on the broader issues of financial inclusion. Where necessary, in the existing framework the FCA is able to have the appropriate powers to support work on this important issue. While the Government do not support these amendments, I hope that I have set out how they are committed to making further progress in this area. I therefore hope that my noble friend Lord Holmes will withdraw his amendment and that the noble Lord, Lord Davies of Brixton, and the noble Baroness, Lady Chapman, will not press theirs when they are reached.

Lord Holmes of Richmond: My Lords, I thank everyone who has participated in this debate, and my noble friend the Minister for her response. This will continue to be a significant issue until we have something in the country which looks far more like financial inclusion for all those who are currently feeling the sharp end, or the wrong end, and who are shut out of so much of what passes for financial services today. However, having listened to my noble friend the Minister, I will not push this matter any further today. I beg leave to withdraw Amendment 13.
Amendment 13 withdrawn.
Amendment 14 not moved.

  
Clause 25: Regulatory principles: net zero emissions target

Amendment 15

Baroness Hayman: Moved by Baroness Hayman
15: Clause 25, page 39, leave out lines 11 to 13 and insert—“(c) the need to contribute towards achieving compliance with sections 1 (the target for 2050) and 4(1)(b) (net UK carbon account) of the Climate Change Act 2008, and the conservation and enhancement of the natural environment, including compliance with relevant targets approved by Parliament, the Scottish Parliament, Senedd Cymru, and the Northern Ireland Assembly.”Member’s explanatory statementThis amendment adds nature to the new regulatory principle on net zero emissions.

Baroness Hayman: My Lords, when we debated this on Tuesday evening I was greatly encouraged by the support from all sides of the House for adding nature, alongside net zero, to the regulatory principles in the Bill. We also had support externally, particularly from Professor Dasgupta himself. I am afraid that I did not find the Minister’s arguments compelling, and therefore I would like to test the opinion of the House.
Ayes 193, Noes 159.

Amendment 15 agreed.

  
Clause 26: Sections 24 and 25: consequential amendments

Amendments 16 and 17

Baroness Penn: Moved by Baroness Penn
16: Clause 26, page 39, line 15, at end insert—“(1A) In section 1JA (Treasury recommendations in connection with general duties), after subsection (1)(c) insert—“(ca) how to discharge the duty in section 1B(4A)(duty to advance competitiveness and growth objective),”.(1B) In section 1K (guidance about objectives), after subsection (1) insert—“(1A) The reference in subsection (1) to the FCA’s operational objectives includes, in its application as a secondary objective, the competitiveness and growth objective (see section 1EB).”.(1C) In section 2I (guidance about objectives), after subsection (1) insert—“(1A) The reference in subsection (1) to the PRA’s objectives includes, in their application as secondary objectives, the competition objective and competitiveness and growth objective (see section 2H).”.(1D) In section 3B (regulatory principles to be applied by both regulators), for subsection (3) substitute—“(3) “Objectives”—(a) in relation to the FCA means—  (i) operational objectives, and(ii) in its application as a secondary objective, the competitiveness and growth objective (see section 1EB), and(b) in relation to the PRA means—(i) the PRA’s objectives, and(ii) in their application as secondary objectives, the competition objective and competitiveness and growth objective (see section 2H).”.(1E) In section 3D (duty of FCA and PRA to ensure co-ordinated exercise of functions), for subsection (4) substitute—“(4) In this section, “objectives”—(a) in relation to the FCA means—(i) operational objectives, and(ii) in its application as a secondary objective, the competitiveness and growth objective (see section 1EB), and(b) in relation to the PRA means—(i) the PRA’s objectives, and(ii) in their application as secondary objectives, the competition objective and competitiveness and growth objective (see section 2H).(5) Where a regulator is proposing to exercise a function that is not one of its general functions, the reference to “objectives” in subsection (1)(a) does not include the secondary objectives mentioned in subsection (4)(a)(ii) and (b)(ii).(6) In this section, “general functions”—(a) in relation to the FCA, has the same meaning as in section 1B(6), and(b) in relation to the PRA, has the same meaning as in section 2J(1).”.(1F) In section 138I (consultation by the FCA), in subsection (2)(d) after “1B(1)” insert “, (4A)”.” Member’s explanatory statementThis amendment would ensure that provisions of the Financial Services and Markets Act 2000 that refer to the objectives of the FCA and the PRA also include a reference to the new competitiveness and growth objective, as inserted by Clause 24 of the Bill.
17: Clause 26, page 39, line 20, at end insert—“(2A) In section 232A (scheme operator’s duty to provide information to FCA)—(a) the existing words become subsection (1), and(b) after that subsection insert—“(2) The reference in subsection (1) to the FCA’s operational objectives includes, in its application as a secondary objective, the competitiveness and growth objective (see section 1EB).””Member’s explanatory statementThis amendment would ensure that section 232A of the Financial Services and Markets Act 2000 includes a reference to the competitiveness and growth objective, as inserted by Clause 24 of the Bill.
Amendments 16 and 17 agreed.

Amendment 18

Baroness Chapman of Darlington: Moved by Baroness Chapman of Darlington
18: After Clause 26, insert the following new Clause—“FCA to have regard to financial inclusion within consumer protection objective(1) FSMA 2000 is amended as follows.(2) In section 1C (the consumer protection objective), after subsection (2)(c) insert—“(ca) financial inclusion;”.”

Baroness Chapman of Darlington: My Lords, we are very disappointed with the Government’s response on this matter so far. They are wilfully not engaging with this topic in the way that we would like. Financial inclusion is relevant to the regulation of financial services. How products are designed, marketed and administered and how advice is provided are all of concern to the FCA and directly important to financial inclusion. There have been piecemeal interventions, which the Government say are welcome, but we would like to see more at this stage. I wish to test the will of the House.
Ayes 191, Noes 154.

Amendment 18 agreed.
Amendment 19 not moved.

  
Clause 27: Review of rules

Amendments 20 to 22

Baroness Penn: Moved by Baroness Penn
20: Clause 27, page 40, line 6, at end insert—“(1A) The statement must provide information about—(a) how representations (including by a statutory panel) can be made to each regulator with respect to its review of rules under section 3RA, and(b) the arrangements to ensure that those representations are considered.(1B) In this section “statutory panel” has the meaning given by section 1RB(5).”Member’s explanatory statement  This amendment would impose a duty on the FCA and PRA to ensure that those regulators include in their statements of policy about the review of rules (required by section 3RB of the Financial Services and Markets Act 2000, as inserted by Clause 27) information about how representations (including by statutory panels) can be made and considered.
21: Clause 27, page 41, line 13, at end insert “and (iii) advance the competitiveness and growth objective;”Member’s explanatory statementThis amendment would ensure that new section 3RD of the Financial Services and Markets Act 2000, as inserted by Clause 27 of the Bill, includes, for the purposes of the FCA’s report, a reference to the competitiveness and growth objective, as inserted by Clause 24 of the Bill.
22: Clause 27, page 41, line 15, at end insert “and(ii) advance the PRA’s competition objective and the PRA’s competitiveness and growth objective;”Member’s explanatory statementThis amendment would ensure that new section 3RD of the Financial Services and Markets Act 2000, as inserted by Clause 27 of the Bill, includes, for the purposes of the PRA’s report, a reference to the competition objective and the competitiveness and growth objective, as inserted by Clause 24 of the Bill. (The words after “review” in section 3RD(2)(b) would become sub-paragraph (i)).
Amendments 20 to 22 agreed.
Consideration on Report adjourned.

Strikes (Minimum Service Levels) Bill
 - Commons Reasons

Motion A

Lord Callanan: Moved by Lord Callanan
That this House do not insist on its Amendment 1 to which the Commons have disagreed for their Reason 1A.
1A: Because it is not appropriate to restrict application of the Bill to England only.

Lord Callanan: My Lords, with the leave of the House I will also speak to Motion B. I will speak to both the Motions to not insist on these amendments and to resist Motions A1 and B1, which are amendments in lieu tabled by the noble and learned Lord, Lord Thomas, and the noble Lord, Lord Fox.
I am delighted to be in the Chamber again following the consideration of this House’s amendments to the Bill in the other place. Although there was a thorough debate of these amendments and those we will look at next, they have been thoroughly rejected by the other place, which has resolved against amendments that would either delay implementation of the Bill or prevent it from achieving any of its policy objectives.
I recognise that this is a topic that Members of both Houses are passionate about and I agree with my colleague, the Minister for Enterprise, Markets and Small Business, that we have had a robust debate on it. However, I point out to the House that the other place resolved against these amendments by significant majorities of 61 and 55 respectively, which are significantly  larger than the majorities of 24 and 31 that amended the Bill in the first place. That is also the case for the amendments that we will discuss in the next group. The elected Chamber has therefore given the Bill and the amendments made here its due consideration and Members there have made the position of their House very clear.
The House will be delighted to know that I do not intend to repeat the debate and the arguments that we have heard on the detail of the Bill here; the Government have already clearly set out their intentions and perspective here, which are reflected in the reasons for disagreement that have come back to us. The Government’s position, and that of the elected Chamber, is clear and I can confirm that the Government have no plans to concede on these issues given the ongoing industrial disputes that show the need for this Bill now more than ever. I therefore ask that noble Lords respect the clear wishes of the other place and, while of course I am always grateful for noble Lords’ insight, passion and expertise on this matter, I hope that this House does not insist on these amendments.
I will now address the amendments in lieu that have been tabled. I thank the noble and learned Lord, Lord Thomas, for his Motion A1, which seeks to limit the application of this Bill to England only, unless the Scottish Parliament and Senedd Cymru agree by resolution for it to apply in those nations. The noble and learned Lord submitted a similar amendment on Report and the Government continue to resist this change for the reasons that I set out then.
First, it is a statutory discretion for the employer as to whether to issue a work notice, taking into account any other legal requirements that the employer may have. However, more fundamentally, the purpose and substance of the Bill is to regulate employment rights and duties and industrial relations. This is a reserved matter, so the consent of devolved Parliaments for this legislation is rightly not required. To add in a requirement for this, as the amendment seeks to do, would create significant inconsistency with wider employment law and I suggest that it would also disturb the careful balance of the UK’s devolution settlement. We will of course, as we have throughout the passage of the Bill, continue to seek to engage with the devolved Governments as part of the development of minimum service levels in those areas.
Finally, Motion B1, tabled by the noble Lord, Lord Fox, relates to additional consultation requirements, assessment of impacts of the legislation and parliamentary scrutiny. As has been made clear to this House many times, sufficient checks and balances are already built into the legislation before regulations can be made. Motion B1 would delay implementation of minimum service levels for an indefinite period and thus extend the disproportionate impact that strikes can have on the public. I am afraid that the Government simply cannot accept that.
This Government recognise the significant role that the UK Parliament has played in scrutinising instruments. New Section 234F already ensures that the regulations will receive the appropriate level of scrutiny by both Houses and are subject to usual processes for consultation.  I therefore urge this House not to amend the Bill in such a way that would cause significant delay to implementing minimum service levels, use up precious parliamentary time to duplicate parliamentary procedures and set some unhelpful precedents for future legislation. For all those reasons, the Government resist Motions A1 and B1 and I hope that noble Lords will agree not to press them. I beg to move.

Motion A1 (as an amendment to Motion A)

Lord Thomas of Cwmgiedd: Moved by Lord Thomas of Cwmgiedd
At end insert “and do propose Amendment 1B in lieu—
1B: Page 2, line 13, at end insert “but applies only to England unless—(a) the Scottish Parliament resolves that it should apply to Scotland from a date specified in the resolution, in which case it so applies, and(b) Senedd Cymru resolves that it should apply to Wales from a date specified in the resolution, in which case it so applies.””

Lord Thomas of Cwmgiedd: My Lords, as this is the first occasion on which a devolution issue has arisen this week, let me make one short observation about the enormous contribution that Lord Morris of Aberavon made to devolution and to using and utilising devolution within the context of the United Kingdom. He can truly be regarded as a father of Welsh devolution and he made an enormous contribution to strengthening the position of Wales within the union.
I turn to my Motion. There are six brief points that I wish to make—and they will be brief, I must emphasise. First, this is not a reserved matter; I fundamentally disagree with the position stated by the Government. If we look at the reality of this Bill, it is not to do with employment rights; it is plainly to do with services in Wales and Scotland. Indeed, it covers the most important services that are devolved. The legislation therefore did require a Sewel Motion and, as we know, that has not been forthcoming.
Secondly, the fact that the Government are prepared to legislate without observing the Sewel convention is, I regret to say, another illustration of the ignoring of this convention and, more generally, the Government’s action in ignoring conventions that underpin our unwritten constitution, putting it in danger. Actions of this kind are imperilling the union, which is the bedrock of our constitution.
Thirdly, and more fundamentally, what is being done is undemocratic. The Scottish Parliament and Senedd Cymru are responsible and accountable for the very services for which this legislation is being brought forward.
Fourthly, the extension of this Bill to Wales and Scotland is bad for the people of Wales and Scotland. If we look at this as a matter of practical reality, the UK Government are the Government of England in respect of these services. They know nothing about education, health, ambulances or the fire service in Wales, or the relationships with staff and employees and how the services run. It is structured differently in England from how it is structured in Wales and Scotland.
Fifthly, I think that it is disingenuous again to say that employers in Scotland and Wales can choose whether to give a work notice. As the Minister in the other place made clear, it is not in the Government’s view a free choice. Employers must consider contractual public law and other legal duties that they have. If this Government’s view is right—I do not agree with it—there is the unspoken consequence of legal action against those who fail in their duties. That is a real threat to the Governments in Scotland and Wales and their ability to manage a service in a way that is in the real interests of the people.
Sixthly, and finally, what this Bill does, in applying its provisions to Scotland and Wales, is to take away power from those who have a responsibility for the management of the relationship and who are accountable to their electorate.
However, on this issue of devolution, the Government —as the Minister made clear just now—have not moved, and plainly do not intend to move, an iota. They maintain their characteristic disdain for devolution. They continue to legislate to override the devolution arrangements. I think that it can be said that they believe with a singular superiority that they know better what is right for Wales and Scotland than their democratically elected Governments and Parliaments do. They seem not to care for the long-term consequences of this persistent conduct.
For these reasons, although it is regrettable for our constitution, union and democracy, unless others urge me to take a different view, I see no point in seeking to divide the House on issues on which the Government do not appear to wish to engage. By using their majority in the other place, they can impose their will on Scotland and Wales, which the Governments and Parliaments of Scotland and Wales do not want.

Lord Wigley: My Lords, I will intervene very briefly, as I did at earlier stages of the Bill, having taken good note of the comments made by the noble and learned Lord, Lord Thomas of Cwmgiedd.
I press on the Government the question of the definition of reserved powers. This goes broader than this amendment and may be something that needs to be looked at in another context, in its own right. Under those circumstances, I accept the lead that has been given by the amendment of the noble and learned Lord, Lord Thomas, and I hope the Government keep the issue alive in their mind.

Baroness Randerson: My Lords, I thank the noble and learned Lord, Lord Thomas, for moving this amendment. I too will be brief. It is important to restate the principles involved here. The Bill is one of a series from this Government that trespass boldly—I would say foolishly—on devolution. The United Kingdom Internal Market Act, the Procurement Bill and the Retained EU Law (Revocation and Reform) Bill do so distinctly, but this Bill takes it to another level. The overwhelming majority of the list of services for which it seeks to set minimum standards and take control are devolved services, and the noble and learned Lord spoke about this. Add to this the Government’s habit of ignoring the need for legislative consent Motions and we are well on the way to a constitutional crisis, which this Government seem openly to invite.
Even now, the Government do not seem to have decided how to develop and impose minimum service levels. Back in March, the Constitution Committee expressed surprise at this in its report, and it is significant that we are still at this point in June. It is nonsense to imagine that the Government can impose minimum service levels, in effect from a distance, on a service for which they have no responsibility at any level, and, in the case of Welsh-medium education, for which they do not even understand the language in which the rules and standards are written.
As it stands, the Bill is unworkable and damaging. The noble and learned Lord’s original amendment, which was agreed by the House, sought to limit the scope of the Bill. The elegance of the new amendment is that it would allow the devolved Administrations to give agreement in the normal way.
In the different political climate of the past, in devolution as it used to be practised and operate, there would be discussions, co-operation, compromises and ultimately agreement between the UK Government and the devolved Administrations. There would be legislative consent Motions agreed before we agreed legislation here. The norms have gone and that is a serious problem for our future democracy.

Lord Balfe: My Lords, can I make a simple point? This is nonsense, because all the services are devolved, as has been said. I am not totally in agreement with the noble and learned Lord, Lord Thomas, but these are probably not reserved powers. Even if they were, how on earth can a Secretary of State for Health in Elephant and Castle or wherever he now lives make rules about hospitals in Glasgow, fire engines in Edinburgh or education establishments in Aberdeen? It just will not work. For that reason, I am very dubious about this legislation. It does not apply to Northern Ireland anyway. Putting it into a Bill is silly—that is the only word for it—because we are being asked to pass legislation which manifestly will do no good and will not work, and I am sorry that the Government are pursuing it.

Lord Collins of Highbury: My Lords, it is a sad fact that this Bill so casually breaches the Sewel convention, which exists to uphold democratic accountability and provide for stable provision of public services. Wherever you live in the United Kingdom, nothing should interfere with those basic considerations. They dictate how services are designed and delivered and who has a say over them, whether that be in the hospital you are rushed to or the school you take your children to. In overriding Parliaments in Wales and Scotland, United Kingdom Ministers are treating those services as incidental or of lesser significance and weakening the say of patients and parents.
This is a problem not just for Wales and Scotland; it is a problem for England and the entire United Kingdom when the Government so regularly choose to sow confusion and division by breaching a convention that exists to help prevent both. We should not be in a position where a former Lord Chief Justice for England and Wales is forced to spell this out in relation to so many Bills. It is a measure of the Government’s consistent course that the noble and learned Lord, Lord Thomas  of Cwmgiedd, is put in such a position. I hope that the points he made will be taken on board, because the road that is going to be continued with is very dangerous for the union. That is why it is so important that Ministers listen.
I want to speak also to the other Motions in this group, which I had hoped the noble Lord from the Lib Dem Benches would move because I was intending to quote him. Nevertheless, on Motion B1, on which we are to hear from the noble Lord, across this House there is serious concern that, once again, Parliament is being sidelined. It is a fundamental issue of accountability and democracy. The Regulatory Policy Committee said that the impact assessment for the Bill is “not fit for purpose” and
“makes use of assumptions in the analysis which are not supported by evidence”.
Again, policy comes later and legislation first; it is ridiculous. We should not have that sort of situation, especially as it impinges on fundamental rights, particularly the right which the Minister constantly says he is prepared to protect: the right to strike.
Employers as well as unions share concerns that the provisions are unworkable and have the opposite effect to that claimed by the Government, will damage co-operation and will undermine voluntary agreements that deliver minimum service levels, the very thing that the Bill is meant to address. This is an imposition and simply will not work. The Delegated Powers Committee said that ministerial powers to set minimum service levels through regulations and define what constitutes a relevant service are inappropriate in the absence of convincing explanation by Ministers. Throughout Report, we heard no convincing arguments on this. The fact of the matter is that, when we heard from Ministers responsible for relevant sections of the Bill, they all said that voluntary arrangements are best and that they work. But, when you undermine those voluntary arrangements, you put the public—the thing that you want to try to protect—at risk.
As the noble Lord, Lord Fox, said on Report—I will have to quote his speech from then rather than today—
“This amendment seeks to bolster Parliament’s oversight. It would require a consultation to be carried out and … reviewed by a committee of each House of Parliament”,—[Official Report, 26/4/23; col. 1223.]
prior to regulations being made. This is absolutely essential if we are to see good legislation rather than simply negative narratives. Those consulted would include relevant unions, employers and other interested parties across the United Kingdom. This is vital to ensure consistency. I conclude by saying that I hope the noble Lord, Lord Fox, will seek the support of the whole House.

Lord Fox: My Lords, I was so enjoying the debate on Motion A1 that I failed to stand up and speak to Motion B1 in my name. I apologise to the noble Lord, Lord Collins, for not providing him with sufficient up-to-date quotations, but he seemed to manage. We have spent so much time on the Bill together that we probably know how each other thinks.
We are in familiar territory, and indeed were too with Motion A1, because this is a long-repeated trope of this Government. They seek to override not only the devolved authorities but our own Parliament here. Bill after Bill has measures that take powers that should rightfully be vested in Parliament and lodge them firmly with the Executive, with very little or negligible recourse. This amendment seeks to regain that balance.
We have had similar discussions many times. I will not go over all these, but I will remind the House very briefly why, in this case, it is very important. The centrepiece of this legislation is a system of predetermined minimum service levels which may be used by employers to determine the minimum manning levels in the event of a strike. If a strike is called, specific work orders have to be or may be issued, requiring named individuals to ignore the strike and go to work. If they do not, as the Bill stands, they can be sacked.
The scale of the minimum service level is key. The nearer it is to 100% of normal service, the smaller the number of people who can legitimately and legally strike becomes—to the point that it becomes almost zero, or zero, and strikes are banned. This is not an abstract argument: if you look at certain areas of emergency care or issues such as rail track signalling, it is clear that a very high level of presenteeism will be required to run those services. In effect, those people on that work order will therefore have their right to strike banned. Speaking as a Liberal, I say that this is a libertarian issue that we find very important.
The setting of these minimum services levels is a vital part of how this Bill will operate. As the Minister has said, some non-binding consultation is under way but as things stand, to all intents and purposes the scale of the minimum service levels is the Secretary of State’s decision and theirs alone. We find that unacceptable.
The Commons declined our last amendment on the grounds that there is “adequate consultation”. We think that there is not and would like to ask the Commons to revisit that process. This amendment would require that consultation takes place and is reviewed by a committee of each House of Parliament prior to regulations being made. That consultation would be more formal and set out in some detail compared to the informal and ad hoc nature of the consultation that is going on. As we heard from the noble Lord, Lord Collins, when he was quoting me, those consulted will include the relevant unions, employers and other interested parties and would include an assessment of the impact on the rights of those workers.
The Minister talked about time and how this would wrap up the process into indefinite time. I remind your Lordships that the original Bill from which this Bill is generated started about a year ago. That Bill of course referred to what was in the Conservative Party manifesto, unlike this one, which has been broadened way beyond the scope of what was in the manifesto. The Government have shown themselves very adept at setting up time for such things to be debated, yesterday being an example. I am sure that time is not the issue—“won’t” rather than “can’t” is what we are dealing with here.
In short, we seek through this Motion to regularise the consultation process and give a mandatory role for Parliament that is far more than we see. With most Governments, this might not be controversial but with this one there has been a pattern and it is systematic, so here we seek to reassert the role of parliamentary democracy. My noble friend talked about there being the potential for a constitutional crisis around the treatment of government and the devolved authorities, I think we are already heading in the same direction with the treatment by this Government of our Parliament.

Lord Callanan: My Lords, I thank all those who have contributed. The House will be pleased to know that I do not intend to detain noble Lords for very long. We have debated these matters extensively on a number of occasions in a very rigorous manner, so I do not intend to repeat all the arguments. But, let me just say very briefly, particularly in response to the noble and learned Lord, Lord Thomas, that we are certain that the minimum service levels are a reserved matter. They are reserved because they obviously apply only when there are strikes, which fall within employment rights and industrial relations. This is clearly a reserved matter under each of the devolution settlements for Scotland and Wales. Put another way, the Bill amends the Trade Union and Labour Relations (Consolidation) Act 1992, the subject of which is specifically reserved under each of these settlements. I always hesitate to disagree with distinguished lawyers on matters of law but I am afraid that we just have a different opinion on this.
I addressed the points from the noble Lord, Lord Fox, in my opening remarks and will not repeat that. I acknowledge all those who have spoken. I understand the strength of opinion in the House on this but once again I point the House towards the other place—the elected place—and the clear will it has expressed on these matters. I urge the House not to prolong this matter unnecessarily and, while it looks as though we are going to vote on the Motion from the noble Lord, Lord Fox, I am grateful that the noble and learned Lord, Lord Thomas, indicated that he would not be dividing the House.

Lord Thomas of Cwmgiedd: I beg the House’s leave to withdraw my Motion.
Motion A1 withdrawn.
Motion A agreed.

Motion B

Lord Callanan: Moved by Lord Callanan
That this House do not insist on its Amendment 2 to which the Commons have disagreed for their Reason 2A.
2A: Because the Bill already contains adequate consultation requirements.

Motion B1 (as an amendment to Motion B)

Lord Fox: Moved by Lord Fox
At end insert “and do propose Amendment 2B in lieu—
2B: Page 3, line 31, at end insert—  “(5) Minimum service regulations may only be made if—(a) the Secretary of State has published draft regulations;(b) the Secretary of State has conducted an impact assessment of the effect of the draft regulations on the services to which the draft regulations relate, addressing, in particular, the effect—(i) on the general public,(ii) on the conduct of these services, and(iii) on the conduct and effectiveness of the exercise of the right to strike in those services;(c) the Secretary of State has conducted a consultation with the representatives of trade unions, employers and any other interested party on the draft regulations and on the effect of the draft regulations on the services to which they relate, and in particular on the effect—(i) on the general public,(ii) on the conduct of those services, and(iii) on the conduct and effectiveness of the exercise of the right to strike in those services,and has laid before Parliament a report on that consultation; (d) the Secretary of State has placed before a Joint Committee of both Houses of Parliament convened for the purpose of reviewing them the impact assessment under paragraph (b) and the report under paragraph (c) and the Joint Committee’s review has been published in a report to Parliament.””

Lord Fox: My Lords, having heard the arguments many times, I would still like to test the will of the House.
Ayes 182, Noes 150.

Motion B1 agreed.

Motion C

Lord Callanan: Moved by Lord Callanan
That this House do not insist on its Amendment 4 to which the Commons have disagreed for their Reason 4A.
4A: Because in order for the legislation to be effective, it is necessary for there to be consequences for an employee who fails to comply with a work notice.

Lord Callanan: My Lords, in moving Motion C, with the leave of the House, I will also speak to Motion D.
Motions C and D in my name cover this House’s Amendments 4, 5, 6 and 7, which removed key parts of the legislation that are necessary to make it effective and to ensure that minimum service levels can in fact be achieved. It is therefore unsurprising that the other place resolved against these amendments with, I remind the House once again, larger majorities than those that amended the Bill in this House. The Government continue to maintain that the approach taken by this legislation is fair and proportionate. To achieve a minimum service level, employers, workers and trade unions all have their part to play.
Motion C and the amendment in the name of the noble Baroness, Lady O’Grady, proposed in lieu of Lords Amendment 4, deal with the consequences of non-compliance with a work notice. As I have said previously, the approach taken by this legislation is fair and proportionate. It enables employers to manage instances of non-compliance in exactly the same way that they would with any other unauthorised absence.
As I have made clear on a number of occasions, an employee losing their automatic protection from unfair dismissal for industrial action, if they participated in a strike contrary to a work notice, does not automatically mean that they will be dismissed—just as failing to attend work without a valid reason normally does not mean that they will be dismissed. It simply enables employers to pursue disciplinary action if they believe it is appropriate, but it is ultimately at the discretion of the employer. I believe that this is the right approach to ensure that minimum service levels will be achieved, while protecting workers in a way that aligns with existing legislation. On that basis, I resist the amendment proposed in lieu.
On Motion D, which covers the role of trade unions, it appears in the amendment proposed in lieu of Lords Amendment 5 that the noble Lord, Lord Collins, accepts that there may be a role for unions to play in ensuring that minimum service levels can be met. However, I strongly believe that it cannot be at the discretion of a trade union as to whether and how it advises and encourages its members to comply with work notices. There must be some consequences if they do not take reasonable steps. On that basis, the Government therefore resist this amendment.
I have noted the feedback from the House, including in the Joint Committee on Human Rights. The Government are willing to consider whether there may be a case for providing further details on what “reasonable steps” are and what it means for trade unions. What we cannot do, however, is accept an amendment such as the one proposed. Without a responsibility for unions to ensure that their members comply, and without any incentives for employees to attend work on a strike day when they have been identified in a work notice, the effectiveness of this legislation is, I am afraid, severely undermined—and I suspect that is the purpose of the amendments.
I cannot therefore accept a continuation of the risk to lives and livelihoods as a result of the disproportionate impact of these strikes. I therefore ask that the House  supports Motions C and D to address this, and I hope that the noble Baroness, Lady O’Grady, and the noble Lord, Lord Collins, will not move their respective Motions C1 and D1. I beg to move.

Motion C1 (as an amendment to Motion C)

Baroness O’Grady of Upper Holloway: Moved by Baroness O’Grady of Upper Holloway
At end insert “and do propose Amendment 4B in lieu—
4B: Page 4, line 40, at end insert—“234CA Protection of employees(1) A person is not subject to a work notice if they have not received a copy of it in accordance with the time limits specified in section 234C(3). (2) It is for the employer to prove that the work notice was received in conformity with subsection (1).(3) An employee may not be dismissed or subjected to any detriment for failing to comply with a work notice and any such dismissal shall be treated as a dismissal to which section 152 applies and any such detriment shall be treated as a detriment to which section 146 applies.(4) A work notice does not place a contractual obligation on an employee to comply with it.””

Baroness O'Grady of Upper Holloway: My Lords, this Motion seeks to uphold a principle long established in British law: that workers on strike are protected against the sack. Noble Lords will recall the concerns of the noble and learned Lord, Lord Judge, at Second Reading. He said that
“this is a troublesome piece of legislation. It asks us all a very simple question: when does the right to withhold your labour … cease to be a right? It answers that question too … the right ceases when, following a ministerial decree, your employer can oblige you to work, and if you fail to do so you can lose your job”.—[Official Report, 21/2/23; col. 1568.]
Not since the Second World War have a UK Government taken power to facilitate the requisitioning of people to work against their will. This would make the UK an outlier in Europe and flies in the face of human rights, equality and ILO conventions as reaffirmed by the Government in the EU–UK Trade and Cooperation Agreement. The Government have succeeded in uniting employers, unions, the devolved nations and service users against them. In the interests of transparency, I repeat that Labour is 100% committed to repealing this bad Bill.
My Motion returns to the core concern: that striking workers selected by the employer they are striking against can be forced to work or face the sack. Remember, this legislation would unilaterally change the employment contracts of potentially millions of people—and all through secondary legislation with no proper parliamentary scrutiny or accountability. Minimum service levels determined by a Secretary of State could be set up to 100% and require staffing levels to match. The union may have jumped every hurdle to secure a lawful ballot and the worker may have democratically voted to strike, but protection against the sack will be whipped away by an employer simply putting their name on a piece of paper. The worker may not even have received the work notice; there is no obligation on the employer to make sure that they do. Their automatic protection against dismissal will be annulled. This is manifestly unjust.
Remember, too, that minimum service levels apply only to strike days. For the rest of the year, a Secretary of State can close fire stations, see rail services fail, see asylum seeker backlogs grow, increase class sizes and let NHS waiting lists—shamefully now at 7.3 million—soar. I have listened carefully to the debates in both Houses. Ministers are trying to sweep the issue of sackings under the carpet.
On 10 January, the then Business Secretary Grant Shapps said it was wrong to frighten people about their jobs. The Minister has said on many occasions, including on 21 February:
“This legislation is not about sacking workers”.—[Official Report, 21/2/23; col. 1563.]
On 22 May, the Under-Secretary of State told the House of Commons that
“nobody will be sacked as a result of the legislation”.—[Official Report, Commons, 22/5/23; col. 103.]
The official reason from the Commons for rejecting my original amendment is that
“for the legislation to be effective, it is necessary for there to be consequences for an employee who fails to comply with the work notice”.
So the consequence of exercising the human right to withdraw your labour is the removal of protection against unfair dismissal. In a free society, that is chilling. The very workers Ministers thanked for their heroism during the pandemic and stood on doorsteps to clap can be punished for striking with instant dismissal.
Key workers have already sacrificed so much for the rest of us. Unless the Government accept this amendment, Ministers now expect them to sacrifice their right to strike, or pay the price with their livelihoods. I sincerely hope that my amendment will be supported in this House and that it will give the opportunity for the Government to listen and think again. I beg to move.

Lord Balfe: Noble Lords will not be surprised that I agree with the amendment as tabled. I have been a student of history for many years. You do not requisition labour except in times of dire national emergency. We did not even requisition it at the outbreak of the Second World War. Conscription did not come in until half way through the First World War. To deprive a person of the liberty to decide whether they go to work is something that is done carefully and very seldom. I think this goes far too far. It is an imposition not only on the workforce but on the trade union movement.
We spend a lot of time saying how much we want to build a prosperous Britain, but I remind noble Lords that 60%-plus of trade unionists have a higher education degree or more. We are not dealing with the trade union movement of the 1920s. We are now dealing with a trade union movement on which Britain depends for its prosperity. The people who look after the skies, fly the planes, run the National Air Traffic Service, keep our nuclear power plants going and manage our railways are highly skilled people who are in trade unions because they see a trade union as being a way of defending their interests.
Sadly for the party opposite, some one-third of them do not see that party as being the one that will deliver their political future. But that is a good thing,  because I do not believe that we want sectarian trade unions. I want people to join trade unions because they want to better the welfare of their country. Taking steps such as this will just alienate people. They are not the sort of steps where people are going to be happy and say, “Oh it’s a really good thing”.
As for minimum service levels, I live in Cambridge. We seem to have had lots of strikes this year, but there has never been one that prevented me getting here, because many of the unions have a harder job keeping their people out on strike than getting the original ballot to put them on strike because, when push comes to shove, a lot of them do not wish to lose the money that they lose. So I think we need to be realistic about this.
All we are doing here is heating up the atmosphere and making it harder for the reasonable people in trade unions to make this country work. Every trade union has within it a group of people who hate strikes; they regard them as being the last thing they want, because it is a sign of failure. So I say to the Government as a whole—because it is not just this Bill—for goodness’ sake, make peace with organised labour; it is fundamentally on your side. It is much more on your side than some of the people who are contributing to the political parties of this nation and doing so for reasons which I would not say are particularly honourable. So please, Minister, send this back to the Commons and look for a compromise. I certainly will not vote for it to go again because I believe that the Commons must, in the end, have its primacy; that is why we have it. But it is quite legitimate to send this back and I ask that, when it gets there, our Ministers on our Front Bench say, “Look, there are very genuine reasons for this. Please try and give us some concessions”.

Baroness Fox of Buckley: My Lords, I will say very briefly I have no doubt that the Government do not want to lead to the sacking of workers through this Bill. However, when the Minister seeks to reassure us with the conclusion that it will be left to the discretion of the employer, I say to the Minister that those are dread words for anyone who is an employee of said employer if you are in dispute. As this Bill is about enforcing consequences, nay punishment, I do not care whether the Minister intends that people are sacked, I simply point out that that could be the consequence even against what the Government want. I hope the Government will reconsider this and bear in mind that it is to do with freedom, rather than coercing people: the freedom to go on strike and withdraw your labour, which is something that all sides of this House should support.

Lord Collins of Highbury: My Lords, I will speak to my Amendment D1 and address some of the issues the Minister mentioned. Of course, when I spoke in the earlier debate, I focused on the fact that, when it comes to minimum service levels during disputes, what works are voluntary agreements—and that is across the world. I repeat that what this Bill does is undermine co-operation and voluntary agreements.
The fact is that this Bill will place trade unions in the unacceptable position of being asked to ensure that members who vote for industrial action do not  take part in that action. It is a complete contradiction of their role. My amendment would remove the obligation on the union to take undefined reasonable steps. The Minister referred to the report from the Joint Committee on Human Rights, and I appreciate the Minister attempting to meet me and my noble friend to discuss what “reasonable steps” might mean. Sadly, the two-page government amendment that he gave me placed huge burdens on employers and unions—the complete opposite of what this Government say they want to achieve.
The simple fact, as I mentioned on Report, is that if a union is deemed not to have followed the legislation, it could mean that the strike is regarded as unlawful and that protections such as automatic unfair dismissal protection could be removed from all striking workers, including those not named in the notices. Again, if a union is deemed not to have followed the legislation, the strike could be regarded as unlawful, and that then opens up all kinds of consequences.
The Minister says that the Bill must have consequences. The real consequence is to undermine the democratic right to strike and remove the immunities that trade unions have historically had to ensure that that right can be exercised. That is why this amendment is so important.
I agree that it is not usual to keep sending things back to the Commons, but it is important that MPs have the opportunity to consider what the human rights committee said: how can you have a law that does not set out the thing that unions are required to do? If this law is passed, unions will not know what they are required to do. This is absolutely outrageous.
The fundamental issue, and what makes this so much worse, is that lawful disputes must be organised in accordance with trade union legislation, which requires proper notice and information going to the employer—steps that no other European country requires their unions to take, but we do. If, after all those processes, a union fails to deliver a work notice after that legal strike has been approved, it will then jeopardise the whole dispute. It is simply not right and I intend to seek the opinion of the House on Motion D1.

Lord Fox: My Lords, Motions C1 and D1, as so excellently set out by the noble Baroness, Lady O’Grady, and the noble Lord, Lord Collins, seek to add protections into the Bill for workers and unions. The Bill as drafted, as we have heard, could have serious consequences for employees and unions that fail to comply with work notices imposing minimum service levels.
To pick up the point that the noble Baroness, Lady Fox, made very well, it does not matter what Secretaries of State or Ministers have said once this law is out there. We move from the situation we have at the moment, under existing industrial action legislation, where those on an official lawful strike are automatically deemed to be unfairly dismissed if they are sacked for taking part. The Bill would disapply this protection for those named by an employer on a work notice. This is a gross infringement of individuals’ freedom and that is why these Benches support Motions C1 and D1.

Lord Callanan: My Lords, we have once again had a reasonably full debate on these matters, so the House will be relieved that I will keep my response brief. We have largely covered many of these points before, so we do not need to repeat them.
Briefly, in response to the noble Baroness, Lady O’Grady, I restate the view of the Government that this Bill is not about sacking workers, and nor is it about forced labour, which is a frankly ridiculous exaggeration. It simply equips employers to manage instances of non-compliance with a work notice. That is exactly the same situation as any other strike action that is not protected under existing legislation.
To be clear, under the original drafting of the Bill an employee who went on strike contrary to being named on a work notice would lose their automatic protection from unfair dismissal only provided that they were notified in advance of the requirement for them to work and that they must comply with the work notice. We expect employees to be told if they are required to work and, in that case, what work they are required to do. In such circumstances, it is reasonable for an employer to consider, if it wishes, disciplinary action if an individual none the less chooses to continue to strike, thereby putting the public at risk. It is at the discretion of the employer as to what, if any, disciplinary action is taken in these circumstances. In response to the noble Baroness, Lady Fox, the Government expect employers to be fair and reasonable and to take this action only where it is necessary.
Unions must have a role to play in minimum service levels, otherwise they would be able to induce people to strike as normal and take steps to undermine minimum service levels being achieved. That directly counters the objectives of this policy. The consequences of a union failing to play that role are consistent with any other failures by a union to comply with any other existing law.
In response to the noble Lord, Lord Collins, as I said in my opening speech the Government are willing to consider whether there is a case to provide further detail on what reasonable steps are, what this means for trade unions and how they might fulfil those obligations.
I stress to this House that Motions C1 and D1 would continue the prolonged and disproportionate impact of strike action on the public. With this legislation, the Government are taking a fair and proportionate approach to balance the fundamental ability of unions and their members to strike, on the one hand, with the need for the wider public to access some of the key services that they expect and pay for, on the other. I therefore hope that the noble Lord, Lord Collins, and the noble Baroness, Lady O’Grady, do not push their amendments. I commend the government Motions to the House.

Baroness O'Grady of Upper Holloway: I wish to test the opinion of the House.
Ayes 180, Noes 150.

Motion C1 agreed.

Motion D

Lord Callanan: Moved by Lord Callanan
That this House do not insist on its Amendments 5, 6 and 7, to which the Commons have disagreed for their Reasons 5A, 6A and 7A.
5A: Because the amendment would remove the requirement for a union to take reasonable steps to ensure that members comply with a work notice in order for strike action to be protected, and this would reduce the impact of the legislation.
6A: Because it is consequential on Lords Amendment 5 to which the Commons disagree.
7A: Because it is consequential on Lords Amendment 5 to which the Commons disagree.

Motion D1 (as an amendment to Motion D)

Lord Collins of Highbury: Moved by Lord Collins of Highbury
At end insert “and do propose Amendment 5B as an amendment in lieu and Amendments 5C and 5D as consequential amendments—
5B: Page 5, line 11, leave out from “strike,” to end of line 22 and insert “it is a matter for the union to determine what advice, if any, it gives to members of the union who are identified in the work notice, and any actions or inactions of the union in this regard shall not result in any tortious liability or the loss of any protection to which the union would otherwise be entitled pursuant to section 219.”
5C: Page 6, leave out lines 19 and 20
5D: Page 7, line 28, leave out “, 234A and 234E” and insert “and234A””
Ayes 179, Noes 148.

Motion D1 agreed.

Financial Services and Markets Bill
 - Report (2nd Day) (Continued)

Clause 35: Engagement with statutory panels

Amendment 23

Baroness Penn: Moved by Baroness Penn
23: Clause 35, page 49, line 40, at end insert—“(ic) how it has complied with the statement of policy on panel appointments prepared under section 1RA in relation to the process for making appointments and the matters considered in determining who is appointed, and”Member’s explanatory statementThis amendment would ensure that the FCA includes in its annual report under paragraph 11 of Schedule 1ZA to the Financial Services and Markets Act 2000 a summary of how it has complied with the statement of policy on panel appointments in section 1RA as inserted into FSMA 2000 by Clause 43.

Baroness Penn: My Lords, I will speak to all the government amendments in this group, which are part of a package of changes that the Government have brought forward to support scrutiny and accountability of the financial services regulators.
This group of amendments focuses on supporting that work through independent analysis and scrutiny. The Government have listened to the view expressed by noble Lords that, for there to be effective scrutiny, it is critical that Parliament and others have access to accurate and impartial information to assist in assessing the performance of the regulators. The Government have carefully considered the proposal, put forward by my noble friend Lord Bridges in Grand Committee, to establish an office for financial regulatory accountability, or OFRA.
While the Government cannot accept the proposal to establish an OFRA, we have considered what more can be done to support the provision of independent analysis and scrutiny. FSMA already requires the regulators to consult on rule proposals and establish independent panels to act as a “critical friend” in the rule-making process. The regulators seek to engage the panels at an early stage of policy development and the panels voluntarily produce reports annually on their work.
Through the Bill, the Government are already enhancing the role of the statutory panels to support scrutiny and accountability. This includes Clause 43, which requires the regulators to publish a statement of policy on how they recruit members of their statutory panels. In addition, following the debate in Commons Committee the Government introduced Clause 44, which requires panel members to be external to the regulators and the Treasury.
However, the Government have heard the calls from across the House for further reassurance that the regulators’ approach to panel recruitment will ensure that panel members are drawn from a diverse range of stakeholders and are sufficiently independent of the regulators. The Government have therefore introduced Amendments 23, 24, and 57, which will require the FCA, the PRA and the PSR, as part of their annual reports, to set out how recruitment to their panels has been consistent with their statements of policy.
The Bill also already introduces measures to strengthen the quality of the regulators’ cost-benefit analysis, including the introduction of new, independent panels to support the production and development of CBA. It is important that CBA reflect as accurately as possible the costs and benefits to firms and consumers of implementing and following regulation. In assessing this, the experience of regulated firms themselves is vital.
The Government are grateful to my noble friend Lord Holmes for raising this issue in Grand Committee, and again through Amendments 44 and 47 today. The Government have reflected on that earlier debate and introduced Amendments 43 and 46, which will require both the FCA and the PRA to appoint at least two members to their CBA panels from authorised firms.
To ensure that Parliament has access to the important work of the panels, the Government have introduced Amendment 50, which provides a power for the Treasury to require the panels to produce annual reports. The Treasury will then be required to lay these reports before Parliament. I can confirm that, in the first instance, the Government will bring forward the necessary secondary legislation to require the CBA panels and the FCA Consumer Panel to publish an annual report to be laid before Parliament, reflecting the fact that the work of the Consumer Panel and the new CBA panels has been of keen interest to noble Lords in earlier debates. The Government will keep this under review, and the legislation will allow the Government to require other panels to publish annual reports and lay these before Parliament if they consider that appropriate in future.
Finally, Amendment 95 seeks to strengthen the independence of the complaints scheme through which anyone directly affected by how the regulators have arrived at their decisions can raise concerns. The scheme is overseen by the independent complaints commissioner, and Amendment 95 seeks to strengthen that independence further by making the Treasury responsible for the appointment of the commissioner, rather than the regulators.
Existing legislation requires the complaints commissioner to publish an annual report, including trends in complaints and recommendations for how  the regulators can improve, which is to be laid before Parliament. Amendment 95 also enables the Treasury to direct the commissioner to include additional matters in the annual report. This will ensure that, where appropriate, the Government can make sure that the report covers issues which the Government consider are important to support scrutiny of. Amendment 95 also requires the regulators to include a summary of where they have disagreed with the commissioner’s recommendations, and their reasons for doing so, in their response to the commissioner’s annual report.
The Government have been clear that the regulators’ increased responsibilities as a result of the Bill must be balanced with clear accountability, appropriate democratic input and transparent oversight. The package of amendments we are debating in this group contribute to that and support Parliament through additional independent analysis and scrutiny.

Lord Holmes of Richmond: My Lords, it is a pleasure to take part in the debate on this group of amendments. I will speak to Amendments 42, 44, 45 and 47 in my name, and offer my support for all the amendments in the name of my noble friend Lord Bridges, to which I have added my name. I will leave him to set them out.
I again thank my noble friend the Minister, and the Treasury officials and team, for all the meetings and work done during Committee, and between Committee and Report, on the question of regulator scrutiny and accountability. I thank her particularly for adopting my Amendments 44 and 47 on the membership of the panels. On my Amendments 42 and 45, could she say a little more about the evidence base the panel will use to come to its recommendations? Would it be valuable to publish any dissenting opinions on the matters to be published? This would be extremely helpful for Parliament to scrutinise the panel’s decisions.
Finally, I ask a broader question around cost-benefit analysis. How will HMT and the regulator seek to ensure that the whole CBA process is meaningful, balanced, considers all majority and minority views, and does not fall into the potential trap of being a utilitarianist pursuit, which cost-benefit analysis can sometimes fall foul of?
That said, I thank again the Minister and the Treasury officials for their support for the amendments and for the discussions we had to come to this point, particularly on Amendments 44 and 47. I look forward to hearing in detail, particularly from my noble friend Lord Bridges and the Minister, the suggestion around the office for regulator accountability.

Baroness Hayter of Kentish Town: My Lords, I will briefly speak to Amendment 39, to which I have added my name, and government Amendment 50. I declare that I am on the board of the ABI. More relevantly, as the amendments are about the Consumer Panel, I speak as a former vice-chair of one of the statutory panels, the Financial Services Consumer Panel. It was some time ago and our focus then was on the FSA rather than the present FCA, but our role was essentially the same.
I was on the panel before the events of 2007 and 2008. As a panel, we were warning about the risk to consumers of interest-only mortgages, high loan to value mortgages—which were really unacceptable to us—and high mortgages relevant to income. It was just before the crash, but I am not pretending that we foresaw what would happen, even though we were worried about those things. We did not anticipate what was happening in the financial sector, starting with Fannie Mae and Freddie Mac and Northern Rock. Our concern was about how consumers would fare should house prices tumble and their incomes not rise—or, indeed, if interest rates should increase. We saw them as a very vulnerable group of consumers.
What is interesting and relevant to Amendments 39 and 50 is that our role was only to advise the then FSA. Sadly, it did not pay enough attention to what we were saying. It might have given it a little bit more on its dashboard had it done so. Had our report been to Parliament and the Treasury perhaps someone might have noticed and taken an interest. That lives in the “What if?” category of history, but it explains my support of any report made by people who represent consumers being brought to public attention.
Amendment 39, to which I have added my name, was so brilliantly written and argued for in the Commons by my honourable friend Nick Smith. I should say that a long time ago we worked together when he was the Labour Party agent in Holborn and St Pancras and I was the CLP chair. Quite a bit seems to have happened since then to both of us. I knew at the time that he was able to take an issue with which he was dealing and see the broader context, which is how we come to the amendment he has essentially developed and which is in front of the House today.
My honourable friend’s interest was sparked when he was campaigning on behalf of members of the British Steel pension scheme—a scandal which led the NAO and the PAC to conclude that the FCA fell drastically short of its proper role in protecting consumers of financial services. His interest in that brings me to where we are today.
In my time, we have witnessed nearly £40 billion being paid in compensation to consumers who were mis-sold PPI, although the full costs were paid much later. Again, as consumer reps, we flagged up that this was not an appropriate product for most of those it was being sold to. Just occasionally, listening to consumers is good not just for them but for the industry and the whole economy. The voice of consumers is worth listening to.
The Government’s Amendment 50 is very welcome. It requires the statutory panels—I am particularly interested in the Consumer Panel—to report to the Treasury and for their reports to be laid before Parliament. This will bring consumer interest to the heart of our public discourse, which will be good for all concerned. I thank the Government for their amendment on this. I am happy that this trumps, or at least meets, Amendment 39.

Baroness Bowles of Berkhamsted: My Lords, in general I support all the amendments in this group. I am particularly pleased to see government  Amendment 50 on the panel reports, assuming that they are implemented, and government Amendment 63 and its companions in the next group to require the regulators to state how they have taken account of parliamentary committee reports in rulemaking. I thank the Minister and the Bill team for covering some of the amendments that I tabled in Committee and similar ones from other noble Lords.
In this group, I have added my name to the amendments tabled by the noble Lord, Lord Bridges, which concern the setting up of an office for financial regulatory accountability, as I did in Committee. The noble Lord is unable to be here today and has asked me to give his apologies and to introduce his amendments.
There is no need to go through the debate that we had in Committee, except to say that since FSMA 2022 there has been a growth in voices calling for an independent oversight body, including the main industry bodies. Those bodies were somewhat disappointed by the Minister’s suggestion in Committee that there was no industry support or suggestion along those lines, because they have made their views clear. I have received emails assuring me that they put points in the consultation responses as well as in published industry papers, although I acknowledge that those were early days and they may not have got as far as formulating ideas in the same way that I had in my consultation response.
There has also been a growth in support in this House. As has been said, if we had campaigned during the Brexit referendum that there would be this massive amount of power going to government, which would then be pressed onwards to unelected regulators, maybe some people would have had different thoughts, but that is water under the bridge. Going back to the amendments tabled by the noble Lord, Lord Bridges, the suite of amendments that cover the office for financial regulatory accountability—Amendments 64 to 72—includes some useful amendments from the noble Lord, Lord Eatwell, with which the noble Lord, Lord Bridges, agrees.
Taken together, the amendments propose the set-up of the office, a Treasury charter for financial regulatory accountability, the main duties of the office and reports, and functional matters such as the right to information and data, membership and financial arrangements. It is of course a large group of amendments, and they will not be pressed to a vote, but the message that the noble Lord, Lord Bridges, particularly wished to give is that we said that this was needed and in due course government will regret that it was not set up. Down the line, as is so often the case, it will be, “We told you so”.
The Government have made the changes to the panels. I acknowledge that it is an improvement that the statutory panels will have to report to Parliament, but that is not the same as having a wholly independent body. The panels are still too much within the web of the FCA. We have criticised them in the past for being captured. The proof of the pudding is perhaps yet to come in how they will be able to act, but they will not be the same as—if you like—an inquisitorial inquiry into specific things that are going on. They are much more in a consultee role, as far as I can see.
I will not disguise the fact that I wished to go further by in some way or another having a programme of independent thematic reviews, with which some other noble Lords agreed, such as the noble Baroness, Lady Noakes, who, unfortunately, cannot be in her place this week, as was explained on Tuesday by the noble Viscount, Lord Trenchard. I remain hopeful that, in the future, the Treasury will see fit to use the powers it has for thematic reviews, not least echoing the point made, on Tuesday as well as today, that the Government are introducing a great deal of emphasis and reporting around the new competitiveness and growth secondary objective—as the Minister said, because it is new, we need to check up on how it is going—but there are many other themes that are equally deserving of attention from time to time.
As I said, while reporting is being introduced around important matters, that is not the same as independent probing to find out about what is not reported. That independent probing, such as it is, will now be left to Parliament’s committees. I appreciate the amendments that the Government have offered, which will be talked about in the next group, but it is clear that if we are to do the kind of scrutiny that gets anywhere near that which I was involved in in the European Parliament, it has to be funded so that the committees can have expert assistance and not just one clerk. That is particularly relevant when we look at the committees in this House of Lords. We already have history here of requests for a sub-committee being declined because there is competition for such things. That has to be fixed. It is no good us having legislation changed to enable us to do scrutiny and then us being impotent to do it, either because there is something else that is sexier for a committee or because there are not the resources to fund it properly.

Viscount Trenchard: My Lords, I too thank my noble friend the Minister for again responding to the strong views expressed within your Lordships’ House and for introducing the amendments that she has. I also agree with what my noble friend Lord Holmes said.
I also thank the noble Baroness, Lady Bowles of Berkhamsted, for the introduction of my noble friend Lord Bridges’ Amendment 64 and the others in that group. I supported his amendments in Grand Committee and am pleased to do so again today. My noble friend set out with his usual clarity, as did the noble Baroness, why we should support these amendments, and I will not waste your Lordships’ time in repeating them.
As my noble friend Lord Forsyth of Drumlean said in Committee, in order for Parliament to be able to hold the Treasury and the regulators to account, it is necessary to have an independent source of information. The proposed office would provide that. It is also welcome that the main duties of the office will include a duty to prioritise the analysis of regulations that restrict competition, negatively affect competitiveness and add compliance costs.
I do not believe that the new office would be a regulator of the regulators. Rather, it would be a means to ensure that the regulators really do get on with the job on which they are behind schedule—the promise made in 2016, in the general election manifesto  and many times since that we will take advantage of our regulatory freedoms to eliminate or simplify those regulations which do not suit our markets and which place a disproportionate burden on market participants. We should not do this at the expense of standards, but to recast the rulebook in common law style will make it much easier for firms to maintain the high standards on which the regulators, the Treasury and noble Lords will all insist. The proposed office would greatly assist in ensuring that this will happen.
I also note—although we will discuss this in the next group—that, ideally, the office would deal principally with a Joint Committee of both Houses rather than two separate committees which might compete with each other. That would double the work and the costs that the office and the regulators would have to bear in carrying out their duties.
I believe the creation of an independent office such as the one proposed would be more helpful than the creation of a multiplicity of panels, which may be set up by statute but remain panels of the entities of which they form part. These are also duplicated between the two regulators, which doubles the cost and time taken by the regulators, and by the relevant committees of your Lordships’ House, in discussing with them.
I hope my noble friend the Minister is prepared to consider further the creation of something which is truly independent of the regulators. I think we have too much legislation by statute to require entities to negotiate with panels of which they are a part, which conceptually I find rather odd in any case.

Lord Vaux of Harrowden: My Lords, this is the first of two groups that seek to improve the level of parliamentary scrutiny and accountability. Arguably, I think the groups are the wrong way around from a logical point of view, but we are where we are. We had long debates on this in Committee, and it was clear that accountability and parliamentary scrutiny was probably the single biggest issue on which Members from across the House felt that the Bill fell woefully short, particularly given the huge amount that is being transferred to the responsibility of the regulators by the Bill.
We heard in Committee of the need for three legs to the whole process of scrutiny and accountability: reporting, independent analysis and the parliamentary accountability elements. This group is about the second leg—the independent analysis that will support the parliamentary scrutiny and accountability. The Government have listened, and that is welcome, but I am sure I am not alone in finding what they have proposed to be rather thin gruel.
The Government have introduced a number of amendments which enhance the role of the various policy panels, in particular the cost-benefit analysis panel. These are welcome, but I am afraid they really do not go far enough. Other noble Lords, especially the noble Lord, Lord Holmes of Richmond, have tabled further amendments to enhance and support the role of the panels. Again, that is very welcome but not, I think, sufficient. Despite these improvements, the panels remain appointed by the regulators and are not genuinely independent.
I remain strongly drawn to the amendments in the name of the noble Lord, Lord Bridges of Headley, introduced by the noble Baroness, Lady Bowles, to which I have added my name, to create a genuinely independent office for financial regulatory accountability. As I said, so much responsibility is being handed to the regulators that it must make sense to have a genuinely robust system of oversight over the regulators, not just responding to consultations about proposed changes to regulations that the Government have put into the Bill but a much more holistic oversight of the whole regulatory direction—something that deals with what the noble Viscount, Lord Trenchard, referred to as the multiplicity of panels. We need to draw this all together, and we need to be much more forward-looking about the direction of regulation, rather than backward-looking as to what is proposed.
This is such an important matter and such a huge volume of work that, if we are to scrutinise it effectively, we need to have something such as the proposed office for financial accountability to enable parliamentary committees and others to carry out the meaningful scrutiny. The noble Baroness, Lady Bowles, talked about the need for resources; we will come on to that in the next group, but she is quite right. This would really help because, if the independent information were available to the committees, it would save them the job of doing all the sifting and all the rest of it, and they would be able to concentrate on the bits that really matter.
Even with the amendments proposed by the Government, I do not think that we get anywhere near that real scrutiny. I am sorry to hear that the noble Lord, Lord Bridges, does not intend to push these amendments; I would have liked him to do so and would have supported him if he had. I hope that he will continue to use his influence as the chair of the Economic Affairs Committee to push for a similar approach.

Lord Eatwell: My Lords, I totally agree with what the noble Lord has just said and therefore I will not repeat his words. The office for financial regulatory accountability proposed by the noble Lord, Lord Bridges, would become an important part of the whole regulatory architecture in this country. The reason why I have proposed a couple of amendments—I am delighted to hear that the noble Lord, Lord Bridges, actually likes my amendments to his amendments—is to enhance the position of the office within that architecture.
We have to recognise that there will be virulent opposition to this in the Treasury. The Treasury’s darkest day in recent years was the day that the Office for Budget Responsibility was established as an independent entity evaluating the performance of the economy. In the same way, having gone through that dark day, I can imagine the horror with which the Treasury observes the possibility of an independent entity evaluating the performance of regulators and the performance of the Treasury in its activity in guiding regulation. It is no surprise at all that we have what the noble Lord has quite appropriately called “thin gruel”, instead of something that would be truly effective and would create both an independent assessor  and a sounding board for the industry, consumers and others who have an interest to express in regulation to get their views on to the front line.
With my Amendments 67 and 72 I am again in slight opposition to the noble Viscount, Lord Trenchard, in the sense that I want to remove the lines in the amendment from the noble Lord, Lord Bridges, that specifically focus on the competition objective, because I do not want to second-guess what the office might do. The office could choose to travel over any part of the regulatory countryside. I regard my Amendment 72 as much more important because, as part of the architecture, the office should be funded through the levy in the same way as other parts of the regulatory system; the FCA, the Financial Services Compensation Scheme and so on are all financed via the standard levy on the industry. After all, this would be a trivial amount of money because—as has been pointed out—it would be only a relatively small entity. I am delighted that the noble Lord, Lord Bridges, liked my amendment to his amendment. I hope that he will be able to carry forward these proposals in the way that the noble Lord, Lord Vaux, suggested.
I will comment on Amendments 44 and 47 from the noble Lord, Lord Holmes, on the membership of panels at the FCA and the PRA. I support his view that placing practitioners on panels can have a very positive effect. I say this because I was an independent member of the board of the old Securities and Futures Authority, which was a practitioner-run regulatory authority with independent members, of which I was one. I was very impressed by the way that practitioners, when required to be regulators and placed in a regulatory role, assumed the role of regulators—they were not just representatives of their special interests. In fact, their special interests were left at the door; what came in with them was their specialist knowledge. I was sceptical when I first joined the board of the SFA but was won over by the performance of practitioners there. The proposal from the noble Lord, Lord Holmes, for practitioners will add to the regulatory effectiveness and knowledge of these panels.

Lord Forsyth of Drumlean: My Lords, I agree with everything that has been said by everyone in the debate so far and support all these amendments. I know that my noble friend Lord Bridges is mortified that he cannot be here today. We discussed the arguments and I supported them in Committee. The noble Lord, Lord Eatwell, is absolutely right about how this would have gone down in the Treasury. But I do not want to be grudging, given the amount of movement that the Minister has been able to achieve as a result of the debate, and the government amendments in this group will make a difference. We are dealing with the old “Quis custodiet ipsos custodes?” problem here. This group of amendments would have taken it a lot further forward, although the government amendments are helpful.
I do not want to anticipate the next debate, but the key question will be, as a number of noble Lords have pointed out, the resource that is made available. If it is not to be through a body such as the OBR, as my noble friend Lord Bridges was suggesting, it will have  to be provided by the parliamentary authorities. Whether that will work, and how effective it will be, will depend on the extent to which the Government give a clear indication that they would welcome it, although it would be a matter for the House. I suspect that would be helpful.
I thank the Minister for having listened to the debate in Committee, which we are in danger of repeating, and having taken some measures, if not going perhaps as far as my noble friend Lord Bridges’s Amendment 64 would require. I also thank the noble Baroness, Lady Bowles, for so ably making the case for it.

Baroness Kramer: My Lords, I will speak very briefly. It will be evident to the House by now that, as was true in Committee, essentially every speaker takes one position, other than the Government. Maybe one or two support the Government’s position, but overwhelmingly there has been a common feeling across political ideologies and views. People from different perspectives, including those who are independent in this House, all share the same set of concerns.
We all particularly welcomed the amendment from the noble Lord, Lord Bridges, because it was a piece of completely new thinking—a way to break the conundrum very effectively by making sure that an office of financial regulatory accountability would change the game by providing Parliament and anyone else responsible for scrutiny and accountability with the analysis, information and data they need to do that effectively. I very much hope that the Government will take it away and consider it.
I join all other noble Lords in finding not only the amendments from the noble Lord, Lord Bridges, but those from the noble Lord, Lord Eatwell, and the others in this group extremely constructive. I vary slightly from the noble Lord, Lord Forsyth; I understand that the Government have moved a little in the amendments they have brought forward in this group but, my goodness, it is a baby step. This issue is far too big to be dealt with only by baby steps.

Baroness Chapman of Darlington: My Lords, I start by acknowledging the government amendments in this group, which make a number of changes that we think are sensible to ensure that the cost/benefit analysis panels have representatives from industry, to allow the Treasury to direct statutory panels to make annual reports and to make it the Treasury’s job to appoint the complaints commissioner. These all represent steps in the right direction—even if, as the noble Baroness, Lady Kramer, has just said, they are not necessarily the giant leaps that some would hope to see.
We tabled Amendment 39 in this group, which would require the FCA consumer panel to produce annual reports on the regulator’s fulfilment of its statutory consumer protection duties, and my noble friend Lady Hayter explained why we were backing this so firmly and spoke about the work with the British Steel pensioners, led by Nick Smith. She saved my blushes because Nick is my husband. I know that is not a declarable interest, but in the interests of transparency, I should probably let people know. We are pleased to see Amendment 50 and will not be  pressing our Amendment 39 to a vote because of it. We believe that the government amendments go a significant way to addressing our concerns, so will not press our amendment, but that does not mean that we are convinced that consumer issues are by any means resolved, and we may have to revisit this topic in future.
The noble Baroness, Lady Bowles, helpfully introduced the amendments tabled by the noble Lord, Lord Bridges, and presented his proposal for an independent office for financial regulatory accountability. This is an interesting proposal but, when considering the Government’s numerous concessions on scrutiny and accountability, at this point we would not be minded to support it at a Division, because the creation of such a body needs significant work and amounts to a fundamental change in how we regulate the sector. We do not want to pre-empt what the Minister has to say, but it was not a core focus of the future regulatory framework review, the outcomes of which the Bill seeks to implement.
The amendments from the noble Lord, Lord Bridges, raise important questions about the capacity of parliamentary committees to scrutinise the regulators’ output, and this is something we have consistently raised with the Minister during our private discussions. When I say “we”, that is very much the royal “we”—I obviously mean my noble friend Lord Tunnicliffe. I am sure that he is grateful to the Minister for the time she has given to him, to my noble friend Lord Livermore and to me in recent weeks. While we understand that it is for Parliament to make its own arrangements, both now and in future, we hope that the Government will acknowledge the substantial workload that committees will have and remain open-minded about whether and how the regulators can better facilitate Parliament’s work.
I am especially grateful to my noble friend Lord Eatwell for his amendments to the OFRA texts, but I suppose this highlights in part the difficulties with supporting the detail of the proposal at a Division at this point. We see that many people agree with the principle, but there is probably a great deal more work to be done on the detail.

Baroness Penn: My Lords, let me respond briefly to the points raised in the debate. I take first the amendments from my noble friend Lord Bridges, well introduced by the noble Baroness, Lady Bowles: Amendments 64 to 66 and 68 to 71, which would establish an office for financial regulatory accountability. As I said in my opening remarks, the Government agree that the provision of accurate and impartial information is extremely important for assisting Parliament in its important scrutiny role—and, indeed, others.
However, as the noble Baroness opposite acknowledged, creating a new body raises questions about how it would interact with the existing accountability structures and the balance of responsibilities between government, Parliament and independent regulators. As I noted in Grand Committee, the provisions for the establishment of the Office for Budget Responsibility referred to in this debate, on which OFRA is, at least in part, modelled, were brought forward in a stand-alone Bill after public consultation, where there was sufficient time to consider carefully its role and remit in advance.  The Government therefore do not think that establishing such a body through amendment to this Bill is the right way forward at this time. We acknowledge the strength of feeling and degree of consensus from different parts of the House on this idea, and noble Lords can rest assured that my noble friend Lord Bridges has made it very clear to me that this is not the last that the Government will be hearing from him on this subject.
I turn to the series of amendments from my noble friend Lord Holmes. Amendments 42 and 45 seek to make specific provision for the regulators’ new CBA panels to be provided with the information required to perform their functions. The Government support the intention of these amendments but consider that the requirement in legislation to establish and maintain the panel already requires the regulator to ensure that the panel has the appropriate information and data to perform its functions.
My noble friend Lord Holmes asked how we could ensure high-quality cost-benefit analysis work. As he and the noble Lord, Lord Eatwell, noted, key to this is the composition of the panels. Panels with members who have diverse backgrounds, expertise and thought will be better placed to ensure that the FCA, the PRA and the PSR receive the most comprehensive appraisal of their policy. That is part of the reason why we have Clause 43, which requires the FCA and the PRA to set out a clear and transparent process for appointing members.
The FCA has also recognised the importance of improving diversity in the membership of its statutory panels and is undertaking a review to identify ways in which it can boost diversity so that the composition of panels appropriately reflects the range of practitioners and stakeholders in financial services. The Government welcome the work that is being done to move recruitment to the panels in this direction.
Amendments 41 and 45 seek to require the new CBA panels to make public their meeting materials and recommendations. The Government are not able to support this as it could undermine the confidentiality of the panels’ contributions, which is crucial to their role as a critical friend to the regulators. The panels and the regulator will already be able to make public their deliberations and materials when they consider it appropriate, without undermining that confidentiality. Through an amendment in this group, the Government are taking a power to oblige the panels to publish their annual reports on their work and lay them before Parliament; we think that this will deliver sufficiently.
If a panel feels that its work or conclusions are being ignored by the regulator, or where there are issues on which the regulator and the panel differ, the Government expect that these will generally be resolved in the course of regular engagement between the regulator and the panel. However, as I have said, panels are able to express their views publicly, including through their annual reports or by publishing responses to consultations. For example, as it currently operates, the FCA’s consumer panel regularly publishes its responses to the regulator’s consultations.
I turn to Amendment 39 in the name of the noble Baroness, Lady Chapman. I am glad that she and the noble Baroness, Lady Hayter, feel that government Amendment 50 seeks the same outcome and should help to deliver that, although I note that, as the noble Baroness said, this is not the last word on consumer issues. However, at least when it comes to this particular focus, we have, I hope, delivered on that.
I know that not all noble Lords are satisfied with all of what the Government have put forward, but this is a step forward in the right direction. I expect to hear more from noble Lords in future on how the new system that we are establishing through this Bill is operating. For now, I commend the amendment.
Amendment 23 agreed.

Amendment 24

Baroness Penn: Moved by Baroness Penn
24: Clause 35, page 50, line 6, at end insert—“(za) after paragraph (ba) insert—“(bb) how it has complied with the statement of policy on panel appointments prepared under section 2NA in relation to the process for making appointments and the matters considered in determining who is appointed,”Member’s explanatory statementThis amendment would ensure that the PRA includes in its annual report under paragraph 19 of Schedule 1ZB to the Financial Services and Markets Act 2000 a summary of how it has complied with the statement of policy on panel appointments in section 2NA as inserted into FSMA 2000 by Clause 43.
Amendment 24 agreed.

  
Clause 36: Engagement with Parliamentary Committees

Amendment 25

Lord Forsyth of Drumlean: Moved by Lord Forsyth of Drumlean
25: Clause 36, page 50, line 30, leave out “chair of the Treasury Committee of the House of Commons” and insert “chairs of the relevant committees of Parliament”

Lord Forsyth of Drumlean: My Lords, I fear that the Minister has stolen my clothes. In speaking to Amendments 25, 29, 31, 36 and 38, which are in my name, and in looking at the government amendments, including Amendment 30, I find myself saying that the government amendments are far more effective and do a better job. They achieve the same purpose, so I say a big thank you to the Minister for having taken this on board. But, just reflecting on the debate we have had, I say that this will work only if very substantial resources are made available to any committee, whether that is a committee of this House or a Joint Committee.
I entirely understand the autonomy of this House, and the Government are to be commended in respecting it. It is up to this House and the other place to decide what committees they will establish, but here we have a statutory opportunity for us to set up a Joint Committee of both Houses, which my noble friend Lord Trenchard has made strong representations for, or indeed another  committee of this House. But be in no doubt that any committee, whether joint or single, is going to have to look at the entire financial regulatory structure that has been taken from the European Union and given to the regulators. That is an enormous task. Although in this House we have many able people with expertise in this area, they have a finite amount of time and will absolutely need to be supported by people with technical expertise and knowledge, of the kind which the noble Baroness, Lady Bowles, would have been quite used to when she was in the European Parliament, so ably chairing a committee with similar responsibilities.
I very much support the government amendments and certainly do not feel the need to press any of mine to the vote in this House. I thank the Minister for having listened so carefully, and for the time that she and her officials have given to considering the arguments and points, which have been made pretty well with a degree of consensus across the Committee and the House. I beg to move.

Lord Faulkner of Worcester: I must advise the House—this will not surprise the noble Lord, Lord Forsyth—that, if this amendment is agreed to, I will be unable to call Amendment 26.

Lord Eatwell: My Lords, I will comment briefly on the proposal which has emerged and is contained in Amendment 30 in the name of the noble Baroness, Lady Penn. It refers to the possibility of parliamentary committees being
“the Treasury Committee of the House of Commons … the Committee of the House of Lords”
or a Joint Committee. It says “and” but I presume that they would be mutually exclusive.
What is extraordinary about this amendment is that it contains a seriously bad idea which might lead to an extremely good outcome. The seriously bad idea is that the two committees, one in the other place and one here in the Lords, would be sitting at the same time and looking at the same material, requiring the same levels of expertise to advise them and the same commitment of time by the regulators—and, perhaps, producing divergent opinions which would lead to regulatory uncertainty. That is a very bad outcome. Why I fully support these amendments, however, is that the seriously bad idea will lead to an extremely good outcome, because people will see that the possibility of having a committee in the other place and a committee here doing the same thing, with all the negative connotations that I have just discussed, will lead to the rational outcome of a Joint Committee of both Houses.

Lord Vaux of Harrowden: My Lords, I added my name to the amendments by the noble Lord, Lord Forsyth, so I thought I would stand and associate myself completely with his comments. I am delighted that the noble Baroness has effectively accepted the proposal. I will add my voice to say this: the subject of financial services is so huge, complex and important that it really requires a dedicated committee, whether a Joint Committee or committee of this House, not just to be part of, say, the Industry and Regulators Committee or the Economic Affairs Committee. It is  much too big a subject to be covered by a committee that is not dedicated to the subject—and, if you have a dedicated committee, it must be properly resourced.
The Government rightly say that this is a matter for Parliament, but let us be realistic: they have huge influence on what happens there. I really hope that the Government and whoever the powers-that-be in this House who make these decisions are—even as the chair of the Finance Committee, this is still slightly opaque to me—are listening. This is so important. We must go ahead and must resource it properly.

Viscount Trenchard: My Lords, I strongly agree with what my noble friend Lord Forsyth has said. I also put my name to his Amendment 25 and other amendments, and I think that he is entirely right.
I also thank the Minister for responding to the concerns expressed on all sides of the House and for recognising that the parliamentary oversight of the regulators may need to be done by a Joint Committee of both Houses. Like the noble Lord, Lord Eatwell, I had also noticed that the amendment says not “or” but “and”, so there is a danger that there might be three committees doing the same thing, which would treble the work required by the regulator and, presumably, by the witnesses and experts who would be called to assist.
Also like the noble Lord, Lord Eatwell, I had the experience of serving on the 1999 Joint Committee of both Houses. This was established by resolution of your Lordships’ House and another place separately but was effectively driven, or at least strongly encouraged, by the Government at the time. The noble Lord, Lord Burns, was a most effective chairman of the Joint Committee, and it was a pleasure to serve on it under his leadership. An added benefit of that Joint Committee was that it enabled noble Lords with an interest in financial services to work much more closely with Members of the other place and concentrated the expertise of both Houses in one committee. I agree with the noble Lord, Lord Eatwell, that it would be a seriously bad outcome were there to be two committees tasked with this huge job.
I also refer to what the noble Baroness, Lady Bowles, said. I was in Brussels at the same time that she was chairman of the ECON, the economic affairs committee of the European Parliament. I often visited the European Parliament at that time. I was struck by the large number of staff and the great facilities available to the committees to carry out their role of scrutinising the legislative proposals brought by the Commission. We have not experienced that burdensome type of work: in the past, under the European model, all our financial services regulation was in primary legislation. It will now be given to the regulators. We therefore need more resources than have been available to us to scrutinise and supervise them properly. This is really important.
Noble Lords should also be grateful to the Minister for restoring equality of involvement between another place and your Lordships’ House. I thought that this was an unfortunate precedent for this type of legislation, particularly as many noble Lords have recent and continuing involvement with financial services firms. I look forward to the Minister’s winding up.

Lord Carrington of Fulham: My Lords, I will add my two cents’ worth to encourage the establishment of a Joint Committee. I cannot believe that having a committee in each House of this Parliament would work effectively, for all the reasons that the noble Lord, Lord Eatwell, has suggested. The committees of this House and the other place are grossly underresourced in any case. We need a committee looking at something as detailed and complex as this which operates in the way that the Public Accounts Committee in the other place is set up, is dedicated to look at regulation and has the resourcing to double-guess not only the regulators but the advisers who advise them, so that it can stand up and come to its own opinion. In the small time that the members of those committees are able to dedicate to the committee, with all the other duties they have as parliamentarians, it should be able to analyse the evidence and come up with sensible, and inevitably highly technical, solutions.
I have some experience of the committees of both Houses. I chaired the Treasury Select Committee, donkey’s years ago, and I served on the Economic Affairs Committee here for some time. Neither of those committees has the resources to be able to undertake this kind of task. It needs a completely new structure. Possibly the only model we can look at is the PAC, which has the National Audit Office advising it very closely. I am not suggesting we should set up a national audit office for regulation, although I know my noble friend Lord Bridges has suggested such a thing. We need to make sure that whatever is set up is properly resourced. I recognise that it is a matter for both Houses to decide how they do that, but we have to be absolutely clear that both Houses can do that only if the financial resources are made available by His Majesty’s Treasury and the Government to enable them to do so. It will be a decision to be taken by His Majesty’s Government and my noble friend the Minister to ensure that the resourcing is available.
It is a necessary step. However, it is a step and almost certainly not the conclusion. Once we have experience of regulating the regulators, we will be able to judge what other changes are needed to make sure that the regulation is effective and that financial markets in London are regulated in a way that is effective and convincing for participants in those markets on a global basis.

Baroness Kramer: I congratulate the noble Lord, Lord Forsyth, on being so persuasive. The Government have listened carefully to his advice and have come forward with amendments that are identical in their outcome, even if perhaps they have found a more effective or legally acceptable way to set out the wording. I am sure that that is a step forward, but I want to join the chorus.
I had the privilege of being on the Parliamentary Commission on Banking Standards, which in effect was a Joint Committee of both Houses. It was very much driven by the Government, who set it up in the first place, and it was properly resourced. From the work we did over the two years, there are two lessons to be drawn. One is that, with that resource, you can genuinely produce the evidence and go into the detailed questioning that is necessary to expose what may not  have been obvious from a superficial or limited inspection; in-depth was possible because of the resource that was made available. The second lesson is that as a Joint Committee—I am very attracted to Joint Committees, as they avoid the duplication that others have talked of—that commission received a degree of respect and significance that is probably not available to a committee that is the creature of one House but not the other. The joining together of the forces of both Houses was meaningful.
We have a new situation: a regulator powerful now beyond any of its expectations because the powers that once lay in Europe, and which, as my noble friend Lady Bowles said, were subject to a great deal of expert and ongoing scrutiny on a regular basis, have now been removed to the regulators and the regulator faces no such scrutiny. That is not good for the regulator either. I hope very much that the lessons will be drawn.
Although I very much liked the suggestion from the noble Lord, Lord Bridges, of an office for financial regulatory accountability, in effect a resource such as that would need to sit underneath a committee, or committees, in order to make sure that they have the proper tools and information. I hope the Government will realise that what they have done is a step forward but that they will have to complete the process. We still have a deficit in scrutiny and accountability, and it is a deficit that matters.

Lord Livermore: My Lords, I join the noble Baroness, Lady Kramer, in congratulating the noble Lord, Lord Forsyth, on persuading the Government to adopt his amendments, albeit in a slightly different form. Given the amount of regulation coming forward in the months and years ahead, and with the expertise that your Lordships’ House can offer, it was crucial that the Government extended the Commons-only provisions to include a relevant Lords committee, and we very much welcome these government amendments.
We are also pleased that the Minister included the option of a Joint Committee, as this future-proofs the legislation in the event that colleagues in both Houses feel—as does my noble friend Lord Eatwell—that such a body would provide a better form of scrutiny of the regulator’s work. As my noble friend Lady Chapman mentioned in a previous group, and as the noble Lord, Lord Forsyth, stressed further, there are still significant outstanding questions about the level of staff resource and expertise that relevant parliamentary committees will be able to draw on. Although these questions cannot be adequately addressed through the Bill, these concessions will at least safeguard the role of your Lordships’ House and enable conversations on resourcing to now proceed.

Baroness Penn: My Lords, the amendments in this group focus on further formalising the role of parliamentary scrutiny of the regulators. The Government agree with noble Lords that effective parliamentary scrutiny, in particular through parliamentary committees, has a critical role to play in improving the quality of regulation, as the noble Baroness, Lady Kramer, said, and the performance of the regulators overall.
The Bill, through Clauses 36 and 47 and Schedule 7, seeks to ensure that the Treasury Select Committee has the information it needs to fulfil its role, by requiring the regulator to notify the TSC when publishing any relevant consultations. However, the Government have listened to the case made by noble Lords that the important role of this House was not adequately reflected by that approach. We have therefore tabled a series of amendments which will require the regulators to also notify the relevant Lords committee when they publish a consultation. These amendments will ensure parity between arrangements for the Commons and the Lords. They also provide that, if a Joint Committee is set up in future, the regulators will be required to notify it in the same way.
I am glad that my noble friend Lord Forsyth feels that these amendments fulfil the aims of his own; that is just as well, as his amendments in Committee and on Report formed the basis for the Government’s approach—that is no coincidence. I am grateful to him for the work that he has put in on this issue and for the time that he has taken to discuss these matters with the Government.
I am also grateful to my noble friend Lord Bridges and the noble Lord, Lord Hollick, for their engagement as the chairs of the current committees in this House that look at the work of the financial services regulators. When I spoke with them, they explained how the EAC and the IRC currently split some responsibility for financial services policy, an example of which was their recent work on LDI, where the EAC focused on the work of the Bank of England and the PRA and the IRC focused on that of the FCA. The Government’s amendments would allow for the two committees to continue with that approach if they wished to do so and for a different Lords committee to receive notifications of consultations from the FCA and the PRA. That structure would be for Parliament to decide.
I shall now pick up on the concern from noble Lords about having multiple committees looking at the same issues or the work of the same regulators. As I have said, the structure is a matter for Parliament, but currently we have the TSC in the Commons, and the Economic Affairs and the Industry and Regulators Committees in the Lords, which at the moment look at various aspects of the regulators’ work without duplicating each other or creating unnecessary burdens. Given the scale of powers for the regulators being established in this Bill, there will be more than sufficient work to go round different committees, and they have already proven themselves able to co-ordinate their work so that it is not duplicative.
We have heard, given the scale of the task before us, that there is concern about the resource made available to those committees. Committee structures and their resourcing will remain a matter for Parliament to decide and I have noted that noble Lords agree that that is the right approach. However, the Government recognise that the new model for financial services regulation will require a step change in this House’s scrutiny of the regulators and agree there must be suitable resource in place to support this. The Government will work with the usual channels and the House authorities in the appropriate way.
The Government have also heard concerns about the feedback loop when Parliament engages with regulatory proposals. There can often be a significant period of time between an initial consultation and the Bill’s existing provisions regarding the regulators’ engagement with parliamentary committees, and final rules being published. In particular, the Government recognise amendments tabled by the noble Baroness, Lady Bowles, in Grand Committee, seeking to require the regulators to explain how parliamentary recommendations have been considered. The Government have therefore tabled Amendments 61 to 63, which require the regulators, when publishing their final rules, to explain how they have considered representations from parliamentary committees. This will ensure that the regulators provide a public explanation of how the views of parliamentary committees have been considered at the point when rules are made. This complements the existing requirement in Clauses 36 and 47, and Schedule 7, for the regulators to respond in writing to the chairs of committees that have made representations. This will ensure not only that regulators appropriately consider Parliament’s representations but that they set out publicly how they have done so.
The debates so far have shown that there is no single silver bullet to solve the problem of accountability. However, the Government are committed to creating an effective, overarching ecosystem in which the various different actors all play their roles in holding the independent regulators to account, ensuring high-quality financial services regulation in the UK. I am therefore grateful that my noble friend Lord Forsyth has said that he will withdraw his amendments, and I intend to move the Government’s amendments, based on those amendments, when they are reached.

Lord Forsyth of Drumlean: My Lords, I am most grateful to my noble friend the Minister for the way in which she has responded to this. I entirely agree with her point, as a former chairman of the Economic Affairs Committee, on the way in which we have worked with the Treasury Select Committee. I agree also with the noble Lord, Lord Eatwell, that it is carefully drafted and—who knows?—it may very well lead to both Houses deciding to have a Joint Committee, which would certainly be the best possible option. But that is obviously not a matter for me and I beg leave to withdraw my amendment.
Amendment 25 withdrawn.

Amendments 26 to 28

Baroness Penn: Moved by Baroness Penn
26: Clause 36, page 50, line 30, leave out “the Treasury Committee of the House of Commons” and insert “each relevant Parliamentary Committee”Member’s explanatory statementThis amendment, together with the amendment at page 50, line 43, would extend the duties of the FCA to notify the Treasury Committee of the House of Commons so as to include a relevant Committee of the House of Lords and a Joint Committee.
27: Clause 36, page 50, line 40, at end insert—“(4A) The reference in sub-paragraph (4)(a) to the FCA’s operational objectives includes, in its application as a secondary objective, the competitiveness and growth objective (see section 1EB).”  Member’s explanatory statement This amendment would ensure that the references to the FCA’s operational objectives in new paragraph 28 of Schedule 1ZA to the Financial Services and Markets Act 2000, as inserted by Clause 36 of the Bill, includes a reference to the competitiveness and growth objective, as inserted by Clause 24 of the Bill.
28: Clause 36, page 50, line 43, leave out “Treasury Committee of the House of Commons” and insert “relevant Parliamentary Committees”Member’s explanatory statementSee the explanatory statement for the amendment at page 50, line 30.
Amendments 26 to 28 agreed.
Amendment 29 not moved.

Amendment 30

Baroness Penn: Moved by Baroness Penn
30: Clause 36, page 50, line 43, at end insert—“(5A) References in this paragraph to the relevant Parliamentary Committees are references to—(a) the Treasury Committee of the House of Commons,(b) the Committee of the House of Lords which—(i) is charged with responsibility by that House for the purposes of this paragraph, and(ii) has notified the FCA that it is a relevant Parliamentary Committee for those purposes, and(c) the Joint Committee of both Houses which—(i) is charged with responsibility by those Houses for the purposes of this paragraph, and(ii) has notified the FCA that it is a relevant Parliamentary Committee for those purposes.”Member’s explanatory statementSee the explanatory statement for the amendment at page 50, line 30.
Amendment 30 agreed.
Amendments 31 and 32 not moved.

Amendments 33 to 35

Baroness Penn: Moved by Baroness Penn
33: Clause 36, page 51, line 42, leave out “the Treasury Committee of the House of Commons” and insert “each relevant Parliamentary Committee”Member’s explanatory statementThis amendment, together with the amendment at page 52, line 11, would extend the duties of the PRA to notify the Treasury Committee of the House of Commons so as to include a relevant Committee of the House of Lords and a Joint Committee.
34: Clause 36, page 52, line 8, at end insert—“(4A) The reference in sub-paragraph (4)(a) to the PRA’s objectives includes, in their application as secondary objectives, the competition objective and the competitiveness and growth objective (see section 2H).”Member’s explanatory statementThis amendment would ensure that the references to the PRA’s objectives in new paragraph 36 of Schedule 1ZB to the Financial Services and Markets Act 2000, as inserted by Clause 36 of the Bill, includes a reference to the competition objective and the competitiveness and growth objective, as inserted by Clause 24 of the Bill.
35: Clause 36, page 52, line 11, leave out “Treasury Committee of the House of Commons” and insert “relevant Parliamentary Committees”Member’s explanatory statementSee the explanatory statement for the amendment at page 51, line 42.
Amendments 33 to 35 agreed.
Amendment 36 not moved.

Amendment 37

Baroness Penn: Moved by Baroness Penn
37: Clause 36, page 52, line 11, at end insert—“(5A) References in this paragraph to the relevant Parliamentary Committees are references to—(a) the Treasury Committee of the House of Commons,(b) the Committee of the House of Lords which—(i) is charged with responsibility by that House for the purposes of this paragraph, and(ii) has notified the PRA that it is a relevant Parliamentary Committee for those purposes, and(c) the Joint Committee of both Houses which—(i) is charged with responsibility by those Houses for the purposes of this paragraph, and(ii) has notified the PRA that it is a relevant Parliamentary Committee for those purposes.”Member’s explanatory statementSee the explanatory statement for the amendment at page 51, line 42.
Amendment 37 agreed.
Amendments 38 to 41 not moved.

  
Clause 41: Cost Benefit Analysis Panels
  

Amendment 42 not moved.

Amendment 43

Baroness Penn: Moved by Baroness Penn
43: Clause 41, page 57, line 29, at end insert—“(7A) The FCA must appoint to the FCA Cost Benefit Analysis Panel at least two individuals who are employed by persons authorised for the purposes of this Act by the FCA, with each one being employed by a different person.”Member’s explanatory statementThis amendment would impose a duty on the FCA to ensure that the FCA Cost Benefit Analysis Panel includes at least two members who are employed by persons authorised by the FCA under the Financial Services and Markets Act 2000.
Amendment 43 agreed.
Amendments 44 and 45 not moved.

Amendment 46

Baroness Penn: Moved by Baroness Penn
46: Clause 41, page 58, line 22, at end insert— “(7A) The PRA must appoint to the PRA Cost Benefit Analysis Panel at least two individuals who are employed by PRA-authorised persons, with each one being employed by a different person.”   Member’s explanatory statementThis amendment would impose a duty on the PRA to ensure that the PRA Cost Benefit Analysis Panel includes at least two members who are employed by PRA-authorised persons.
Amendment 46 agreed.
Amendments 47 and 48 not moved.

Amendment 49

Baroness Penn: Moved by Baroness Penn
49: Clause 41, page 58, line 31, leave out “paragraph 10(1)” insert “paragraphs 10(1) and 10A”Member’s explanatory statementThis amendment ensures that the PRA Cost Benefit Analysis Panel (established under Clause 41) will be required to provide advice in relation to cost benefit analyses prepared for the purposes of consultation under the new paragraph 10A of Schedule 17A to FSMA 2000 (inserted by Clause 19).
Amendment 49 agreed.

Amendment 50

Baroness Penn: Moved by Baroness Penn
50: After Clause 44, insert the following new Clause—“Panel reports(1) The Treasury may by regulations require specified statutory panels of the regulator to produce an annual report on their work and provide that report to the Treasury.(2) Regulations under subsection (1) may make provision about the content of the annual report.(3) The Treasury must lay a copy of each report prepared by virtue of this section before Parliament.(4) Each specified statutory panel of the regulator must publish its reports prepared by virtue of this section in such manner as it thinks fit.(5) In this section—(a) “statutory panels of the regulator” means—(i) in relation to the FCA, the panels mentioned in section 1RA(8) of FSMA 2000,(ii) in relation to the PRA, the panels mentioned in section 2NA(8) of FSMA 2000, and(iii) in relation to the Payment Systems Regulator, a panel established under section 103(3) of the Financial Services (Banking Reform) Act 2013;(b) “specified” means specified in regulations under this section.(6) Regulations under this section are subject to the negative procedure.”Member’s explanatory statementThis new Clause would provide the Treasury with a power to make regulations to require annual reports to be produced by the statutory panels established under the Financial Services and Markets Act 2000 and the Financial Services (Banking Reform) Act 2013.
Amendment 50 agreed.
Amendment 51 had been withdrawn from the Marshalled List.

  
Clause 46: Bank of England: rule-making powers

Amendments 52 and 53

Baroness Penn: Moved by Baroness Penn
52: Clause 46, page 67, line 14, at end insert—“(1A) The statement must provide information about—  (a) how representations (including by a statutory panel) can be made to the Bank with respect to its review of rules under section 300I, and(b) the arrangements to ensure that those representations are considered.(1B) In this section “statutory panel” has the meaning given by section 1RB(5).”Member’s explanatory statementThis amendment would impose a duty on the Bank of England to ensure that the Bank includes in its statement of policy about the review of rules (required by section 300J of the Financial Services and Markets Act 2000, as inserted by Clause 46) information about how representations (including by statutory panels) can be made and considered.
53: Clause 46, page 68, line 23, at end insert “and(ii) the Bank’s secondary innovation objective (see section 30D(2) of the Bank of England Act 1998);”Member’s explanatory statementThis amendment would ensure that new section 300L of the Financial Services and Markets Act 2000, as inserted by Clause 46 of the Bill, includes, for the purposes of the Bank’s report, a reference to the Bank’s secondary innovation objective, as inserted by Clause 45 of the Bill.(The words after “advance” in section 300L(2)(a) would become sub- paragraph (i)).
Amendments 52 and 53 agreed.

  
Clause 47: Application of FSMA 2000 to FMI functions

Amendments 54 and 55

Baroness Penn: Moved by Baroness Penn
54: Clause 47, page 72, line 32, at end insert “and the Bank’s secondary innovation objective (see section 30D(2) of the Bank of England Act 1998)”Member’s explanatory statementThis amendment would ensure that new paragraph 33B of Schedule 17A to the Financial Services and Markets Act 2000, as inserted by Clause 47(14) of the Bill, includes a reference to the Bank’s secondary innovation objective, as inserted into the Bank of England Act 1998 by Clause 45 of the Bill.
55: Clause 47, page 72, line 37, at end insert—“(g) in sub-paragraph (5A)(b)(ii) and (c)(ii), the references to the PRA being notified were references to the Bank being notified.”Member’s explanatory statementThis amendment would extend the duties of the Bank of England to notify the Treasury Committee of the House of Commons so as to include a relevant Committee of the House of Lords and a Joint Committee.
Amendments 54 and 55 agreed.

  
Schedule 7: Accountability of the Payment Systems Regulator

Amendments 56 to 60

Baroness Penn: Moved by Baroness Penn
56: Schedule 7, page 152, line 44, at end insert— “(1A) The statement must provide information about—(a) how representations (including by a relevant panel) can be made to the Regulator with respect to its review of requirements under section 104B, and(b) the arrangements to ensure that those representations are considered.(1B) In this section “relevant panel” means—(a) a panel of the Payment Systems Regulator established under section 103(3),  (b) a panel of the FCA mentioned in section 1RA(8) of FSMA 2000, and(c) a panel of the PRA mentioned in section 2NA(8) of FSMA 2000.”Member’s explanatory statementThis amendment would impose a duty on the Payment Systems Regulator to ensure that the Regulator includes in its statement of policy about the review of requirements (required by section 104B of the Financial Services (Banking Reform) Act 2013, as inserted by paragraph 7 of Schedule 7 to the Bill) information about how representations (including by statutory panels) can be made and considered.
57: Schedule 7, page 157, line 30, at end insert—“(bb) set out how the Regulator has complied with the statement of policy on panel appointments prepared under section 104I in relation to the process for making appointments and the matters considered in determining who is appointed,”Member’s explanatory statementThis amendment would ensure that the Payment Systems Regulator includes in its annual report under paragraph 7 of Schedule 4 to the Financial Services (Banking Reform) Act 2013 a summary of how it has complied with the statement of policy on panel appointments in section 104I as inserted into the 2013 Act by paragraph 7 of Schedule 7.
58: Schedule 7, page 158, line 36, leave out “the Treasury Committee of the House of Commons” and insert “each relevant Parliamentary Committee”Member’s explanatory statementThis amendment, together with the amendment at page 159, line 5, would extend the duties of the Payment Systems Regulator to notify the Treasury Committee of the House of Commons so as to include a relevant Committee of the House of Lords and a Joint Committee.
59: Schedule 7, page 159, line 5, leave out “Treasury Committee of the House of Commons” and insert “relevant Parliamentary Committees”Member’s explanatory statementSee the explanatory statement for the amendment at page 158, line 36.
60: Schedule 7, page 159, line 6, at end insert—“(5A) References in this paragraph to the relevant Parliamentary Committees are references to—(a) the Treasury Committee of the House of Commons,(b) the Committee of the House of Lords which—(i) is charged with responsibility by that House for the purposes of this paragraph, and(ii) has notified the Regulator that it is a relevant Parliamentary Committee for those purposes, and(c) the Joint Committee of both Houses which—(i) is charged with responsibility by those Houses for the purposes of this paragraph, and(ii) has notified the Regulator that it is a relevant Parliamentary Committee for those purposes.”Member’s explanatory statement See the explanatory statement for the amendment at page 158, line 36.
Amendments 56 to 60 agreed.

  
Clause 50: Consultation on rules

Amendments 61 to 63

Baroness Penn: Moved by Baroness Penn
61: Clause 50, page 74, line 9, at end insert—  “(4D) Where representations are made to the FCA by a Committee of the House of Commons or the House of Lords or a Joint Committee of both Houses in accordance with subsection (2)(e), the FCA’s account mentioned in subsection (4) must also describe how the FCA has considered the representations made by that Committee in making the proposed rules.””Member’s explanatory statementThis amendment would impose a duty on the FCA to include in the account that the FCA must publish under section 138I(4) of the Financial Services and Markets Act 2000 details about representations made by Parliamentary Committees.
62: Clause 50, page 74, line 23, at end insert—“(4D) Where representations are made to the PRA by a Committee of the House of Commons or the House of Lords or a Joint Committee of both Houses in accordance with subsection (2)(e), the PRA’s account mentioned in subsection (4) must also describe how the PRA has considered the representations made by that Committee in making the proposed rules.””Member’s explanatory statementThis amendment would impose a duty on the PRA to include in the account that the PRA must publish under section 138J(4) of the Financial Services and Markets Act 2000 details about representations made by Parliamentary Committees.
63: Clause 50, page 74, line 36, at end insert—“(5D) Where representations are made to the Payment Systems Regulator by a Committee of the House of Commons or the House of Lords or a Joint Committee of both Houses in accordance with subsection (3)(d), the Payment Systems Regulator’s account mentioned in subsection (5) must also describe how the Payment Systems Regulator has considered the representations made by that Committee in making the proposed requirement.”Member’s explanatory statementThis amendment would impose a duty on the Payment Systems Regulator to include in the account that the Payment Systems Regulator must publish under section 104(5) of the Financial Services (Banking Reform) Act 2013 details about representations made by Parliamentary Committees.
Amendments 61 to 63 agreed.
Amendments 64 to 72 not moved.

  
Schedule 8: Cash access services

Amendment 73

Baroness Penn: Moved by Baroness Penn
73: Schedule 8, page 160, line 17, after “service”” insert “, “free cash access service””Member’s explanatory statementThis amendment is consequential on the amendment at page 160, line 29.

Baroness Penn: My Lords, the Government recognises that, while digital payments are increasingly present in our society, cash continues to play a vital role in many people’s everyday lives. That is why this Bill puts in place a framework to protect the ability of people and businesses across the UK to access cash withdrawal and deposit facilities for the first time in UK law and introduces new powers for the FCA.
It is important to recognise that, on the whole, cash access in the UK remains comprehensive. Industry is already funding a range of new and innovative services to support communities and ensure that they have  easy access to cash. To date, LINK has recommended new shared cash access services in over 100 communities across the UK. This includes the introduction of over 50 shared banking hubs. While the opening of these facilities is taking time to get right, I welcome the recent openings of new hubs in Troon in Ayrshire and Acton in west London. I also understand that the pace of delivery is due to accelerate over the coming months.
Having said that, I recognise the strength of feeling on this matter in both Houses, in particular on ensuring free access to cash for individuals, as demonstrated by Amendment 81 in the name of my noble friend Lady Altmann. Over 1.2 billion cash withdrawals in the UK last year were from free-to-use cash machines and we have heard impassioned contributions highlighting the reliance on cash by some of the most vulnerable in our society. Therefore, the Government have tabled amendments which will require the FCA to seek to ensure reasonable provision of free cash access services for current accounts of personal customers. This forms part of the regulator’s wider duty of seeking to ensure reasonable access to cash.
The Bill already requires the Government to publish a statement of their policies on access to cash, which the regulator must have regard to when determining reasonable access and informing the use of its powers. These amendments also require the Government to include their policy on free cash access services for current accounts of personal customers in that statement.
I trust that the Government will have the support of noble Lords in making these significant amendments to further strengthen the Bill in relation to access to cash and within the context of the related topics we will discuss today. I therefore beg to move Amendment 73.

Lord Holmes of Richmond: My Lords, it is a pleasure to take part in this debate and I will speak to Amendments 82 to 85 and 110 and 111 in my name. I start by thanking the Minister and Treasury officials for all the work they have done around access to cash and, indeed, the moves they have taken. It is great testament to all those organisations which have campaigned on cash for so many years, and will make a real difference to people up and down the country.
Without in any sense pre-empting the work that the regulator and others will do on this, I ask my noble friend the Minister to set out some thoughts on what reasonable access might look like. What are the Government expecting? Allied to that, while I join her in welcoming the increase in the number of shared banking hubs that are coming online, what do the Government see as a reasonable number of hubs to be open by the end of this year?
My Amendment 82 seeks to go further and is really predicated on a very simple belief: what point is access to cash if there are no places to spend it? What currency does cash have in those circumstances? The start point would be really to have all businesses with a physical presence mandated to accept cash. Stepping back from that, as my amendment does, does my noble friend the Minister not agree that any government service, be it central or local, and any public service,  particularly that which involves a payment, must accept cash? Similarly, any third party acting on behalf of national or local government in performing a public service should be mandated to accept cash. Does my noble friend see it as reasonable for any business, private though it may be, with a turnover of £100,000—as set out in my Amendment 82—to have to continue to accept cash while we move and transition towards a more digital financial services system?
Amendment 83 seeks to make our cash network part of the critical national infrastructure. There are two key reasons for this. First, it would enable cash usage, enable the economy to work and enable financial inclusion. Secondly, does my noble friend the Minister not agree that, when one looks at the current geopolitical state of the world, making the cash network part of the critical national infrastructure would provide a good second and third line of resilience if the digital systems should go down or suffer an attack? As things stand, that is not beyond the realms of possibility.
Amendment 84 addresses banking services specifically and would enable the Treasury to determine that such services must be available on a high street with a certain number of shops and premises. Banking services would include withdrawals and deposits and must cover both individuals and businesses. Indeed, as the amendment sets out, if there is a last branch standing, that branch should not be allowed to close unless alternative provisions are already in place, such as a banking hub.
Amendment 85 addresses the accessibility of financial services and products. This is differentiated from access to financial services, although there are some obvious overlaps. The amendment points out the difficulties with the accessibility of certain financial services and products. The obvious and most easy example to understand is card payment machines where the buttons are removed and there is merely a flat screen. They are completely inaccessible for me and thousands of people.
In Committee, my noble friend the Minister talked about discussions between the Government, the RNIB and other organisations. Can she update the House on where those discussions have got to? How will the Government ensure that, whether one is paying for a meal or a bicycle, the means of payment is accessible for all those seeking to use it?
Amendment 110 addresses the need for a review of access to digital financial services and products. I raised this in Committee and do so again because it seems highly necessary and a logical next step from the Access to Cash Review, which was completed in 2019. Although I am a staunch supporter of cash and people’s access to and acceptance of it, the future is digital. However, we must ensure not only that that future is accessible but, equally crucially, that the transition to it is accessible. Does my noble friend the Minister agree that further work by HMT in this area would not only make sense following the Access to Cash Review but do a great service in addressing issues which will be felt sharply if we do not address them at this stage?
I will give just one brief example. I could have on my handheld device the best mobile banking app ever created, but if I do not have the digital skills and the  confidence to use that app, no payment will be made. Similarly, if, in those same circumstances, I have those digital skills but no mobile connectivity or broadband, that payment will not be made. We need this review of access to digital financial services, before these problems become acute and they affect not only people’s finances but all elements of their lives.
Finally, Amendment 111 addresses the issue of the last branch standing in any particular location but seeks to push a bit further. If there is a remaining branch on a town high street, that is a good thing. However, if that branch does not offer a full banking service, particularly to small and medium-sized businesses and micro-businesses, and if it does not serve more than 20% of the local community, does my noble friend the Minister not agree that we should change the regulations to enable a shared banking hub to be opened in that area?
I look forward to my noble friend the Minister’s response. I hope she will respond fully to all my amendments, but particularly to Amendment 111. A very simple change between Report and Third Reading would make such a potential difference for many of the areas in those circumstances.

Baroness Kramer: My Lords, I will be exceedingly brief because we took, as we should have, a lot of time on this issue during Committee. We have also discussed financial exclusion already. Once again, I am channelling my noble friend Lady Tyler of Enfield, who wishes that she were not ill and could be here today. I will focus my remarks on Amendment 80 in the name of my noble friend Lady Tyler, and which is signed by me.
The numbers that have been provided to any parliamentarian of interest by LINK on the rate of bank branch closures are frankly scary. The number of bank branches is now below 5,000 across the country and is expected to fall to around 1,000 in the next few years. Amendment 80 gives the FCA power, where certain conditions are met, to direct the establishment of a banking hub. Banking hubs are the solution proposed by the banking industry, in association with LINK, to provide a physical banking facility which is essentially a collective of the relevant banks and the Post Office, in locations where bank branches have disappeared. I am very sympathetic to the idea that the noble Lord, Lord Holmes, proposed, where a branch in name but not in practice because its services are so limited would qualify as well.
LINK has recommended 100 of these shared hubs, but so far only six have opened. Quite often, that is because of the resistance of the banking institutions, which, in effect under the current scheme, have a veto on whether these hubs happen. The gap is yawning and the FCA needs to step in. Because this was raised in Committee, I say that anyone who thinks that online banking is a substitute for face-to-face banking can live only a very vanilla life. I found out the hard way that the systems online and the telephone constantly get it wrong. Often, the only way to resolve a complex issue is face to face. As others have said, including the noble Lord, Lord Holmes, the 5 million people who find digital difficult are even more disadvantaged.
I seriously hope that the Government will accept Amendment 80 because it is the missing mechanism to deliver the project—the Government themselves back the project—of banking hubs and shared banking. To get it delivered we need Amendment 80 to put powers into the hands of the FCA to make sure that it happens. This is a project, I repeat, that the Government themselves have sponsored, in a sense. We need the enablement and delivery to take place rapidly.

Baroness Chapman of Darlington: My Lords, I congratulate the noble Lord, Lord Holmes, on tabling his amendments and his tenacity in raising these issues on a very regular basis. He is absolutely right to do so. We were pleased to table Amendment 81 in Committee, and we re-signed it when retabled by the noble Baroness, Lady Altmann, on Report.
We strongly welcome the Government finally bringing forward meaningful protections for cash access. Just in case the noble Lord, Lord Tunnicliffe, starts to doubt his powers of persuasion, we wonder if the Minister could explain why the noble Lord did not seem to have the magic touch when it came to getting him to accept it. The position seems to have changed somewhat now.
It is good that organisations such as Which? have welcomed this concession, noting that cash continues to be hugely important for many households, particularly those which need to keep track of their spending during the cost of living crisis. People should not have to pay fees to access their own money. While we welcomed the Government’s previous move to offer cashback at some retailers without a purchase, cashback services are not available anywhere near widely enough for that to be a substitute.
We welcome the progress made, but there is obviously a lot more to be done. An increasing number of people are finding themselves with little or no access to face-to-face banking services. While the banking hub initiative has promise, its coverage is too limited for it to be anything like a viable solution at this point. We welcome the fact that the noble Lord, Lord Holmes, has tabled several amendments on this. We hope that the Minister is able to go beyond previous assurances, and we look forward to her reply.

Baroness Penn: My Lords, I will first address the point made by the noble Baroness, Lady Chapman, on the change between Committee and Report. On a whole host of areas, we have reflected on the discussions we had in Committee. The Government have taken the time to do that work and were able to bring forward amendments at this stage, whereas we simply were not able to bring forward amendments on a whole host of topics in Committee. I do not think it is anything to do with differing powers of persuasion between the different stages.
My noble friend Lord Holmes has many of the amendments in this group. I am glad that he also welcomes the Government’s amendments in this area. He asked what reasonable access would look like; that further detail will be for the policy statement. It is important to recognise that currently, on the whole,  cash access remains extensive. According to FCA analysis, over 96% of the population are within 2 kilometres of a free-to-use cash access point.
Turning to my noble friend’s amendments, I too acknowledge his persistent campaigning on the provision of access to cash across successive financial services Bills. However, the Government are not able to support the approach in Amendment 82. We do not consider it necessary or appropriate to place additional requirements on organisations to accept cash across the public and private sectors. This should be a decision for individual organisations as they decide how best to operate. What I can say to my noble friend is that the provisions in the Bill do not reflect access just to withdrawal facilities but to deposit facilities, which will support organisations to continue to accept cash.
On Amendment 83, again, this is an issue that my noble friend has raised previously. The designation of critical national infrastructure is sensitive and is not made public. I reassure my noble friend and all noble Lords that appropriate arrangements are in place to ensure the resilience of the UK’s financial system, including cash provision.
I turn to Amendment 80 from the noble Baroness, Lady Tyler, spoken to by the noble Baroness, Lady Kramer, and Amendments 84 and 111 from my noble friend Lord Holmes, which all relate to access to banking services. I acknowledge the strength of feeling on this topic and the perspectives that have been raised. As people acknowledge, it is clear that the nature of banking is changing, and the long-term trend is moving towards greater use of digital and telephone banking services over traditional branches. Of course, it is vital that those customers who rely on physical services are not left behind, which is why the FCA is taking an assertive approach to its guidance for firms on this issue.
Where firms are closing branches, the regulator expects them to put in place appropriate alternatives where reasonable. If firms fall short, the FCA can and will ask for closures to be paused or for other options to be put in place. Beyond digital access, several banks are rolling out community outreach initiatives when they close branches, maintaining key physical services in local libraries, shopping centres and roaming vans. Over 99% of personal and 95% of business customers can, and do, do their everyday banking at 11,500 Post Office branches.
On banking hubs, determining their location and the range of services provided is a commercial decision. My noble friend asked what would be a reasonable number of hubs to have open by the end of the year. As I said earlier, over 50 have been announced. We expect delivery on that commitment to pick up as this year progresses. Furthermore, since the last debate, several firms have made the commitment that, where a banking hub has been announced as a result of their branch closure, they will not close that branch until the hub is open, so we have a double lock of improving the speed of delivery but not losing services until we see improvement in the pace of delivery. That is welcome and shows that the industry is taking this issue seriously.
Regarding accessibility in my noble friend Lord Holmes’s Amendments 85 and 110, I absolutely share his ambition for financial services to be accessible to all. He spoke about some of the work that we discussed in Committee and asked for an update. Perhaps I can write to him after today’s debate with an update on that work.
I turn to the amendment on a review of digital inclusivity. Many financial services firms also support access to digital services through initiatives to distribute devices, teach skills, or facilitate support networks. The Government recognise that we need to be proactive in this space, and there is a range of work under way to ensure that financial services adapt to the needs of consumers in the digital age and to address the issues that my noble friend rightly raised. These include driving further progress on access to digital infrastructure, connectivity and skills to fully benefit from this transition.
I am grateful to my noble friend for his constructive challenge of the Government’s approach to this important issue. I assure him and all noble Lords that the Treasury will continue to consider where there may be gaps in the Government’s approach and ensure that no one is left behind as we evolve into new ways of managing our money. An example of this is that the Government recently held a call for evidence on the Payment Services Regulations, which invited views on this policy. We are currently considering responses, including where these are linked to financial inclusion.
I hope that, although the Government are not able to support the other amendments in this group, I have reassured noble Lords that the Government consider these issues very seriously through this work. I hope that noble Lords do not move their amendments when they are reached.
Amendment 73 agreed.

Amendments 74 to 77

Baroness Penn: Moved by Baroness Penn
74: Schedule 8, page 160, line 29, at end insert—“(3A) A “free cash access service” is a cash access service that is—(a) a free of charge service which enables cash to be placed on a relevant personal current account, or(b) a free of charge service which enables cash to be withdrawn from a relevant personal current account.”Member’s explanatory statement This amendment would provide a definition of “free cash access service” in new Part 8B of the Financial Services and Markets Act 2000, as inserted by paragraph 1 of Schedule 8 to the Bill.
75: Schedule 8, page 161, line 4, at end insert “, “relevant personal current account”” Member’s explanatory statementThis amendment is consequential on the amendment at page 161, line 15.
76: Schedule 8, page 161, line 15, at end insert—“(3A) A “relevant personal current account” means a relevant current account held by one or more individuals for purposes outside any business, trade, craft or profession of that individual or those individuals.”Member’s explanatory statementThis amendment would provide a definition of “relevant personal current account” in new Part 8B of the Financial Services and Markets Act 2000, as inserted by paragraph 1 of Schedule 8 to the Bill.
77: Schedule 8, page 161, line 37, at end insert—“(2A) The reference to cash access services in subsection (2) includes free cash access services.”Member’s explanatory statementThis amendment would clarify that the cash access policy statement that the Treasury must prepare under new Part 8B of the Financial Services and Markets Act 2000, as inserted by paragraph 1 of Schedule 8 to the Bill, includes policies concerning free cash access services.
Amendments 74 to 77 agreed.
Amendment 78 not moved.

Amendment 79

Baroness Penn: Moved by Baroness Penn
79: Schedule 8, page 164, line 7, at end insert—“(1A) In this section references to cash access services include references to free cash access services.”Member’s explanatory statementThis amendment would ensure that the FCA’s duty, in new section 131U of the Financial Services and Markets Act 2000, as inserted by paragraph 1 of Schedule 8 to the Bill, of seeking to ensure reasonable provision of cash access services includes seeking to ensure reasonable provision of free cash access services.
Amendment 79 agreed.
Amendments 80 to 85 not moved.

  
Schedule 11: Central counterparties

Amendment 86

Baroness Penn: Moved by Baroness Penn
86: Schedule 11, page 257, line 7, at end insert—“(2A) Regulations under this paragraph may apply to partial property transfers generally or only to partial property transfers—(a) of a specified kind, or(b) made or applying in specified circumstances.”Member’s explanatory statement This amendment would provide consistency with other parts of Schedule 11 on Central counterparties by clarifying that regulations made under paragraph 75 (restriction of partial transfers) may apply to transfers generally or only to transfers of a particular kind or in particular circumstances, as specified in the regulations.
Amendment 86 agreed.

  
Schedule 12: Write-down orders

Amendments 87 to 89

Baroness Penn: Moved by Baroness Penn
87: Schedule 12, page 311, line 11, at end insert— “(5A) A liability, to the extent of its reduction by a write-down order under this section, is to be treated as extinguished unless and until revived by section 377H or 377I.”Member’s explanatory statementThis amendment would clarify the effect of a write-down order under section 377A (to be inserted into FSMA 2000 by paragraph 1 of Schedule 12 to the Bill) on the treatment of liabilities reduced by the order.
88: Schedule 12, page 314, line 40, leave out “termination” and insert “revocation”Member’s explanatory statementThis amendment would correct a reference in the table of termination events in the context of describing when a write-down order regarding the value of an insurer’s liabilities ceases to have effect.
89: Schedule 12, page 324, line 30, leave out “reduced value” and insert “reduction in value”Member’s explanatory statementThis amendment would provide a drafting clarification to ensure that the effect of a write- down order is more clearly reflected in this provision concerning compensation to policyholders where insurers are in financial difficulties.
Amendments 87 to 89 agreed.

Amendment 90

Lord Harlech: Moved by Lord Harlech
90: After Clause 59, insert the following new Clause—“The Ombudsman scheme(1) FSMA 2000 is amended as follows.(2) In section 429 (Parliamentary control of statutory instruments), in subsection (2B) after paragraph (c) insert—“(d) provision made under paragraph 15(3) of Schedule 17.”(3) Paragraph 15 of Schedule 17 (the Ombudsman scheme: power of scheme operator to charge fees) is amended as set out in subsections (4) and (5).(4) In sub-paragraph (1) after “respondent” insert “or other persons of a specified description”.(5) After sub-paragraph (2) insert—“(3) The reference in sub-paragraph (1) to persons of a specified description is a reference to such descriptions of persons as may be specified in regulations made by the Treasury.(4) The power conferred by sub-paragraph (3) to specify descriptions of persons may not be exercised so as to provide for eligible complainants to fall within a specified description of persons.(5) The reference in sub-paragraph (4) to “eligible complainants” is a reference to complainants who are eligible in relation to the compulsory or voluntary jurisdiction of the ombudsman scheme (see section 226(6) and 227(7)).(6) Before making regulations under sub-paragraph (3) the Treasury must consult the scheme operator.””Member’s explanatory statementThis new Clause would enable the scheme operator of the Financial Ombudsman Scheme to make rules requiring persons of a description specified in regulations, other than eligible complainants, to pay fees in connection with the investigation of complaints (in addition to the existing power to impose fees on persons who are the subject of complaints).

Lord Harlech: My Lords, the Financial Ombudsman Service was established through the Financial Services and Markets Act 2000 to provide for the proportionate, prompt and informal resolution of disputes between consumers and financial services firms. The FOS offers a cost-free service for consumers, which is fundamental to its purpose.
The FOS is funded by a combination of an annual levy on regulated firms and case fees. Under the  current framework, it is responsible for setting its case fee rules and can charge case fees only to firms that are subject to complaints. This means that claims management companies—or CMCs—and other professional representatives cannot be charged for bringing cases to the FOS. The Government heard the concerns raised by noble Lords, particularly by my noble friend  Lady Noakes during Grand Committee, about CMCs bringing large numbers of vexatious claims against firms to the FOS.
Amendment 90 therefore addresses those concerns by amending FSMA 2000 to give the Treasury the power to make regulations specifying categories of persons to whom the FOS can charge case fees. The Treasury intends to add CMCs and other professional representatives such as law firms to this list. This will enable the FOS to amend its rules to charge case fees to CMCs and other professional representatives for bringing complaints, subject to its usual consultation processes. By specifying who can be charged by the FOS in regulations, the Government can ensure that the full range of claims management models can be effectively captured. It also allows flexibility to amend this list in future if different models emerge.
The Government are clear that all consumers should be able to access the FOS free of charge and without the need for any CMC support. The FOS remaining a cost-free service for consumers is fundamental to its purpose. The amendment therefore expressly prevents the Treasury adding consumers to the categories of persons who can be included in the regulations.
In summary, Amendment 90 will ensure that the Treasury is able to empower the FOS to charge case fees to CMCs while ensuring that the FOS remains cost-free for consumers. I beg to move.

Baroness Kramer: From these Benches, the amendment makes sense to us.

Baroness Chapman of Darlington: Happily, it makes sense to us as well. Without wishing to delay anybody—remembering the exchanges we had before this debate started today—I wonder whether the Minister could indicate the level of fees. He said that consumers would be excluded, which is very important. Are the Government confident that this will not in any way suppress the use of this service? Do they have anything in mind to improve awareness of the service among consumers?

Lord Harlech: My Lords, I am grateful for the contributions in this short debate and thank both noble Baronesses for them.
On case fees, the amendment follows the existing approach under FSMA to allow the FOS to charge fees to respondents. Under this approach, the Government set out through legislation who the FOS is able to charge fees to and it will be for the FOS to set the detail of those case fee rules. This may include when firms should be charged; for example, from the first case or after a certain number of cases. Similarly, the amendment will not prescribe the specific approach the FOS will have to take in charging CMCs—it will be for the FOS to look at those fees. The FOS highlighted concerns from industry about this issue in its feedback statement following its recent consultation on its funding framework, and it acknowledged examples of poor behaviour by CMCs.
The Government agree that where there are wider implications it is critical that the bodies in the financial services regulatory framework, including the FCA and the FOS, co-operate effectively. That is why Clause 38 introduces a statutory duty for the FCA, the FOS and the Financial Services Compensation Scheme to co-operate on issues that have significant implications for each other or for the wider financial services market. Clause 38 also ensures that the FCA, the FOS and the FSCS put appropriate arrangements in place for stakeholders to provide representations on their compliance with this new duty to co-operate on matters with wider implications. These organisations already co-operate on a voluntary basis through the existing wider implications framework. Clause 38 will enhance that co-operation and ensure that these arrangements endure over time while retaining the operational independence of the bodies involved.
As I have set out, the Government are clear that all consumers should be able to access the FOS free of charge, without the need of any CMC support. Amendment 90 will enable this.
Amendment 90 agreed.
Consideration on Report adjourned.
House adjourned at 4.46 pm.